THE INFLUENCE OF ENVIRONMENTAL, SOCIAL, AND GOVERNANCE (ESG) DISCLOSURE SCORE ON FIRM FINANCIAL PERFORMANCE (EVIDENCE FROM THE G7 LISTED CAR MANUFACTURING COMPANIES 2019-2023)

• Main Author: Oktobian Goh, Bryan
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/83970
• Institution: Institut Teknologi Bandung

With the increasing focus on sustainable business practices and responsible investing, it's important to understand how ESG score impacts financial performance, especially in the automotive industry. This study takes a quantitative approach, using panel regression analysis to examine data from 2019 to 2023. It looks at car manufacturers in G7 countries, including Canada, France, Germany, Italy, Japan, the UK, and the US. Key financial metrics like Return on Assets (ROA) and Return on Capital (ROC) are analyzed against ESG scores from the Bloomberg ESG data index. To ensure thoroughness, the study also includes control variables such as Total Assets and GDP. The results show significant negative links between ESG score and some financial metrics, particularly ROA and ROC. Interestingly, environmental disclosures negatively impact ROC, reflecting investors' growing concern about environmental issues. Social factors don’t seem to affect financial performance much, while governance factors negatively impact ROA and ROC. These findings shed light on the relationship between ESG practices and financial outcomes in the automotive sector, offering valuable insights for investors, policymakers, and industry stakeholders committed to sustainable practices and long-term value creation.