ANALYSIS OF THE RELATIVE INFLUENCE OF ESG ISSUES ON THE PROFITABILITY OF MINING COMPANIES IN INDONESIA BY USING ARTIFICIAL NEURAL NETWORK METHOD (ANN)

• Main Author: Tan, Evangeline
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/85457
• Institution: Institut Teknologi Bandung

Sustainable Development Goals that have been standardized into ESG are currently the focus of all stakeholders that are taken into consideration in investment. This study aims to identify the significant relationships between ESG issues and profitability (Return On Assets) of mining companies in Indonesia, as well as the hierarchy of their influence contributions. Data on ESG issues and profitability (Return on Assets) over 8 years (2015-2022) from 7 mineral and coal mining companies were obtained from Bloomberg and analyzed using Pearson Correlation, Multiple Linear Regression, and Artificial Neural Network. The results of the study include: (A) The issues identified as having a significant relationship on profitability (Return on Assets) of mining companies in Indonesia are air quality, ecological impact, energy management, GHG emissions management, ethics & compliance, occupational health & safety management, & executive compensation, are positively correlated with ROA; (B) The hierarchy of the influence contributions of ESG issue as mentioned in point A, is (1) Ethics & Compliance, (2) Executive Compensation, (3) Occupational Health & Safety Management, (4) Ecological Impact, (5) GHG Emissions Management, (6) Energy Management, dan (7) Air Quality. The hierarchy of the influence is also validated using Multiple Linear Regression analysis, specifically for independent variables that partially have a significant influence.