ESG implementation and its effect on financial performance: Focusing on sustainable financial strategies of green companies in Indonesia
Shafitranata et al.
What the paper says
Type of the article: Research ArticleAbstractThis study examines the effect of ESG reporting on the financial performance of green companies listed in Indonesia between 2020 and 2024, totaling 85 companies with 425 observations. Using ESG scores and corporate financial data from Bloomberg, three panel models were estimated: a random-effects model for ROA, a fixed-effects model for ROE, controlling for size, leverage, growth, and cash flow, and a test for sectoral differences between energy and non-energy companies. The results indicate that governance scores are positively associated with ROA (β = 0.011, p = 0.092), whereas ESG scores are weakly positively associated with ROA (β = 0.020, p = 0.080). Environmental and social scores are not statistically significant to ROA or ROE. For ROE, firm size is the main significant predictor (β = 2.126, p = 0.042). The results observe significant differences between the energy and non-energy sectors, with the energy sector reporting higher financial performance after controlling for ESG. Finally, this study indicates that ESG reporting policies that promote good governance can yield faster returns to shareholders.AcknowledgmentThis study was supported by the Ministry of Research, Technology, and Greater Education and Al-Madani School of Economic Sciences. 
Evidence weight
Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40
| F · citation impact | 0.50 × 0.4 = 0.20 |
| M · momentum | 0.50 × 0.15 = 0.07 |
| V · venue signal | 0.50 × 0.05 = 0.03 |
| R · text relevance † | 0.50 × 0.4 = 0.20 |
† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.