Does Green Finance Matter? Sustainability Disclosure and Financial Performance

Abstract

The increasing awareness of environmental and social issues has encouraged companies to be more transparent in disclosing their sustainability information. At the same time, green finance has emerged as a crucial instrument that not only supports environmentally friendly projects but also has the potential to impact the financial performance of companies. This study aims to analyze the impact of sustainability disclosure on the economic performance of companies, as well as to examine the role of green finance funding as a moderating variable on the financial performance of companies. The method used in this research is a quantitative approach, utilizing secondary data from the annual reports of companies listed on the Indonesia Stock Exchange (IDX) that have received the ESG Star Award during the period 2020-2024. The sample selection was carried out using the purposive sampling method. Sustainability disclosure is measured using a sustainability disclosure index based on ESG standards, while financial performance is measured with the Return on Assets (ROA) and Return on Equity (ROE) indicators. The moderation variable of green finance funding is measured based on the company's access to green financing instruments (for example, green bonds or green loans). Data analysis was conducted using moderation regression, including interaction tests to examine the moderation effects. The results of this study are expected to provide empirical evidence regarding the positive impact of sustainability disclosure on financial performance, as well as to identify whether green finance can strengthen or weaken that relationship. These findings are expected to benefit investors, company management, regulators, and other stakeholders in decision-making related to sustainable investments and the development of the green finance market in Indonesia. In addition, this research is also expected to contribute to the literature on sustainable finance and environmental accounting.