Observational analysis identifies that social and governance ESG disclosure enhances financial performance in companies, indicating potential benefits of robust sustainability practices.
As climate concerns grow, companies—especially in high-emission sectors such as energy and basic materials—face pressure to adopt sustainability practices. This study examines how reducing GHG emission intensity, ESG individual and overall disclosure impact financial performance measured by Return on Asset. Panel data regression analysis have conducted using STATA 17 software to analyse 21 Indonesian-listed companies in year 2020 - 2023. Testing reveals that GHG reduction and environmental disclosure have no significant effect on financial performance while social, governance, and overall ESG disclosure positively influence it. The results suggest that comprehensive ESG reporting enhances stakeholder trust and legitimate. Companies are advised to prioritize robust social and governance disclosures, as these ESG components demonstrate a stronger positive impact on financial performance.
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Damayanti et al. (2025) studied this question.
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