AN ANALYSIS OF THE IMPACT OF ENVIRONMENTAL, SOCIAL, AND GOVERNANCE PILLARS ON THE MARKET VALUE OF MINING COMPANIES IN INDONESIA

• Main Author: Ayuning Mutiara, Sekar
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/85446
• Institution: Institut Teknologi Bandung

Mining industry is often perceived as a major contributor to environmental degradation. Stakeholders have observed numerous unforeseen and irresponsible practices within the mining sector. Companies are now being urged to prioritize not only corporate profits but also the impacts of their operational activities. They are expected to be more transparent in their non-financial reporting related to environmental, social, and governance factors. This study analyzes the impact of Environment, Social, and Governance (ESG) pillars on the market value of mining companies in Indonesia. Data was obtained from Bloomberg Terminal, utilizing data from seven mineral and coal mining companies in Indonesia over the period of 2015 to 2022. This research examines the relationship between ESG performance and Tobin's Q in relation to market value. The study also considers control variables such as Return on Assets (ROA) and firm size. Regression results indicate that, of the three ESG pillars, only the Environment pillar has a significant impact on Tobin's Q, both in simultaneous and univariate analysis. The Social and Governance pillars do not show significant effects on the company's market value. This suggests that mining companies that implement good environmental management tend to have higher market values, consistent with the global trend of prioritizing sustainability in investments. This has significant implications for investors in considering ESG aspects, particularly the environment, as a key factor in investment decision-making in the mining sector.