BOARD CHARACTERISTICS AND ESG PERFORMANCE: AN EMPIRICAL STUDY OF PUBLIC COMPANIES IN INDONESIA

• Main Author: Febrico Renaldo Pane, Josua
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/82944
• Institution: Institut Teknologi Bandung

This research examines the impact of board characteristics on the environmental, social, and governance (ESG) performance of publicly listed companies in Indonesia. The research examines the impact of board composition on ESG scores by analyzing firms included in the KOMPAS100 index. This includes examining variables such as the number of directors and commissioners, gender diversity, independence, the presence of foreign members, and the existence of a sustainability committee. The research incorporates data from Sustainalytics, financial reports, and sustainability reports. It also considers control variables such as public shares, return on assets, leverage, company age, firm size, and state ownership. Significant correlations were found between the characteristics of the board, the sustainability committee, and the ratings associated with environmental, social, and governance concerns (ESG). Companies with larger board of directors and a higher ratio of female directors and foreign directors demonstrate inferior environmental, social, and governance (ESG) performance, while companies with a higher portion of foreign commissioners demonstrate superior environmental, social, and governance (ESG) performance. Sustainability committees play a role in lowering the ESG (environmental, social, and governance) performance. The results suggest that the successful management of sustainability relies on the implementation of well-structured governance systems and the utilization of diverse board compositions. The research implemented regression models to analyze the impact of board characteristics on ESG performance. It is recommended that policymakers create policies that promote the establishment of board diversity and sustainability committees. Corporate executives are advised to strategically adjust the composition of their boards to fit with sustainability objectives, thereby improving environmental, social, and governance (ESG) performance and increasing financial performance.