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October 16, 2025Open Access

Impact of ESG Performance on Financial Performance: A Study of Companies in the SRI-KEHATI Index

Key Points

Findings show that esg performance does not significantly affect financial performance in the studied companies.
The debt-to-asset ratio significantly influences profitability, while institutional ownership shows no measurable impact.
Quantitative analysis using regression analysis assessed esg scores and various financial metrics to understand their relationship.
Implications suggest that the influence of sustainability efforts on financial outcomes may be context-dependent.

Abstract

The research investigates how Environmental, Social, and Governance (ESG) performance affects the financial performance of corporations represented in Indonesia’s SRI-KEHATI Index. Using a quantitative approach with regression analysis, the research examines ESG scores sourced from Morningstar Sustainalytics, alongside financial metrics such as Return on Assets (ROA), and control variables including debt-to-asset ratio and institutional ownership. The findings reveal that ESG performance, comprising environmental, social, and governance dimensions, does not have a significant direct effect on financial performance in this sample. Conversely, the debt-to-asset ratio significantly influences profitability, whereas institutional ownership shows no measurable impact. The results suggest that the relationship between sustainability efforts and financial outcomes might be more long-term or context-dependent, warranting further research into sectoral and regional variations.

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