ESG Factors and Financial Performances: Evidence from Listed Company in Indonesia

DOI

10.2991/978-94-6463-817-2_48How to use a DOI?

Keywords

Environmental, Social, and Governance; Financial Performance; Profitability; Return on Asset; ESG Score

Abstract

The Environmental, Social, and Governance (ESG) framework is a comprehensive instrument to assess an organization’s ethical and sustainable impact. Organizations that perform well in all ESG aspects are considered to be in a good position for success across time because they can manage risks effectively and develop lasting relationships with stakeholders. This study aims to assess whether ESG affects financial performance. The ESG score was employed in this research to evaluate ESG implementation, while the Return on Assets indicator was used to determine financial performance concerning profitability. The subject of the study is 61 listed companies in Indonesia that have been included in the ESG–Based Index in 2020-2023. The Panel Data Regression approach is used in this study to analyze the effect of ESG factors on Profitability. According to the fixed effect model, this research indicates that the ESG score positively impacts profitability performance. Businesses that invest in social projects or sustainable practices with a good strategy can see an immediate impact. However, some companies may not see immediate benefits but can experience long-term advantages such as enhanced reputation, reduced risks, and increased efficiency. These factors contribute to improved profitability over time, demonstrating the long-term financial benefits of ESG activities.

Copyright

© 2025 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Muhammad Syahrul Ramadhan
AU  - Maya Sari
AU  - Budhi Pamungkas
PY  - 2025
DA  - 2025/09/12
TI  - ESG Factors and Financial Performances: Evidence from Listed Company in Indonesia
BT  - Proceedings of the 9th Global Conference on Business, Management and Entrepreneurship (GCBME 2024)
PB  - Atlantis Press
SP  - 393
EP  - 399
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-817-2_48
DO  - 10.2991/978-94-6463-817-2_48
ID  - Ramadhan2025
ER  -