THE IMPACT OF ENVIRONMENTAL, SOCIAL AND GOVERNMENT (ESG) PERFORMANCE TO THE FINANCIAL RISK: STUDY CASE OF MINING COMPANIES IN INDONESIA

• Main Author: Ikhwanul Yogaswara, Mohammad
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/85510
• Institution: Institut Teknologi Bandung

Recently, implementation of environmental, social, and governance (ESG) become important issue in the extractive industry. Investors in developed countries are concerned about ESG integration in company operational activities as one of the benchmarks for carrying out financial activity. Mining is an extractive industry whose operational activities will have impact to environmental, social, and economic to the communities around the mine. If the company fails to manage this impact, it could decline its reputation and hinder its ability to secure financing from investors. This situation poses a significant financial risk for the company, which requires careful consideration. Indonesia, as a developing country, is beginning to incorporate ESG into mining operations. This is a challenge for the mining industry in Indonesia. This study will be carried out to investigate the impact of ESG integration on the financial risks faced by Indonesian mining companies. This study applied Altman Z-score as an bankruptcy prediction to quantify the companies financial distress and ESG score data from Bloomberg from 2015- 2022. Those data will be analyzed using regression model to see significant level in each variables. As conclusion, integrating ESG into mining operations will give impact and mitigate the companies financial risk.