ANALYSIS OF THE INFLUENCE OF ENVIRONMENTAL, SOCIAL, AND GOVERNANCE (ESG) VALUES ON THE FINANCIAL PERFORMANCE OF MINING COMPANIES IN INDONESIA

• Main Author: Fairuz, Nabila
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/85491
• Institution: Institut Teknologi Bandung

The mining industry in Indonesia plays an important role in the national economy, but also faces challenges related to environmental and social impacts. The concept of Environmental, Social, and Governance (ESG) has become a major concern for companies, investors, and regulators, as it encompasses environmental responsibility, social commitment, and good governance, which can affect a company's reputation and financial performance. Previous research shows that good ESG performance can be positively correlated with a company's financial performance. This study aims to analyze the effect of ESG values on the financial performance of mining companies in Indonesia. This study uses panel data from seven mining companies in Indonesia listed on the stock exchange, with an observation period from 2015 to 2022. The company's financial performance is measured using ROA as the dependent variable, while ESG values are used as the independent variable. The linear regression method is used to test the relationship between ESG scores and ROA. The results of the study show that ESG values have a significant positive effect on the company's financial performance, meaning that the higher the ESG score, the better the company's financial performance in terms of ROA. These findings support the importance of implementing ESG practices in improving the financial performance of mining companies in Indonesia, as well as providing implications for company managers and stakeholders in sustainability-oriented decision making.