Corporate Environmental, Social and Governance (ESG) dan Pengaruhnya terhadap Kinerja dan Nilai Perusahaan

Abstract

The contribution of businesses to economic growth was inevitable, yet at the same time poses an emerging risk to future sustainability. The concept of corporate environmental, social and governance (ESG) is prominently highlighted as an approach to addressing the challenges. Extant literatures have empirically documented the positive influences corporate ESG performance on firm performance and firm value. However, several literatures found modest corporate ESG initiatives in small-medium enterprises (SMEs). Hence, this study aims to investigate corporate ESG performance in Indonesian public SMEs as well as its influence on the performance and value of the firms. The study was conducted using a sample of firms consisting of 17 non-financial public SMEs consistently listed in the IDX PEFINDO25 index over the period 2016-2020. Secondary data sourced from the published financial reports, annual reports and sustainability reports were utilized in this study. The descriptive method was adopted to describe the corporate ESG performance while exercising its impact on operational and financial performance as well as firm value through a panel data regression model. We employed other firms’ fundamental factors such as firm size, leverage, liquidity, CAPEX intensity, sales growth and dividend yield as additional explanatory variables. The study found a trend of annual increase in corporate ESG disclosure and performance of SMEs. Furthermore, fixed-effects model (FEM) regression analysis revealed an insignificant impact of corporate ESG performance on operational and financial performance, which proxied by return on assets (ROA) and return on equity (ROE) ratios respectively. These results indicated that the direct impact of corporate ESG performance on firm’s internal performance did not acquire in short-term. Conversely, the study exhibited a significantly positive influence of corporate ESG on firm value, measured by Tobin’s Q ratio. It denotes a positive market response and valuing public SMEs above their book value for their efforts to improve ESG performance. The result also revealed a fairly similar influence of firm fundamental on operational performance, financial performance, and firm value.