The Influence of Environmental, Social, and Governance (ESG) on Corporate Financial Performance

Abstract

This study investigates the impact of Environmental, Social, and Governance (ESG) factors on corporate financial performance. The research focuses on companies listed on the Indonesia Stock Exchange in 2023. A purposive sampling technique was employed, yielding a final sample of 70 companies that met the selection criteria. The study utilizes simple regression analysis to examine the relationship between ESG and financial performance. ESG performance is measured using ESG scores published by Morningstar Sustainalytics, while financial performance is assessed based on Return on Assets (ROA). The results indicate a positive and significant relationship between ESG performance and financial performance, suggesting that companies with higher ESG scores tend to achieve better financial outcomes.