The Influence of Environmental, Social, Governance (ESG) and Green Innovation on Company Business Performance
DOI:
https://doi.org/10.33830/jfba.v3i2.6096.2023Keywords:
ESG;, Green Innovation; , Company's business performance;Abstract
The research aims to provide empirical evidence on the relationship of ESG and green innovation to company's business performance. The independent sample of this research is ESG was measuring ESG score. Dependent variables green innovation were measures using innovation of green product and innovation of green process. Sampling used in this research is purposive sampling technique. The sample of this research consisted of 66 manufacturing companies from 2016 to 2021. The data collected was analyzed using panel data regression analysis. This result shows that ESG positively influence business performance proxied by Tobin's Q and ROA unsupported. Green Innovation, which is proxied by green product innovation on the company's business performance, shows mixed results. Where green product innovation positively influence the company's business performance proxied by ROA. Conversely, green product innovation does not influence company's business performance proxied by Tobin's Q. Meanwhile, Green Innovation proxied by Green Process innovation effect on the company's business performance is not supported. Thus, it can be seen that ESG has not become a concern for investors in Indonesia, as evidenced by the limited number of public companies that disclose ESG scores. Green Innovation which is proxied by green product innovation and green process innovation shows mixed results which shows that customers are also considering purchasing products from companies whose innovations produce environmentally friendly products
References
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Chen, Y.-S., & Chang, K.-C. (2013). The nonlinear effect of green innovation on corporate competitive advantage. Quality & Quantity, 47(1), 271–286. https://doi.org/10.1007/s11135-011-9518-x
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Chung, K. H., & Pruitt, S. W. (1994). A Simple Approximation of Tobin's q. Financial Management, 23(3), 70. https://doi.org/10.2307/3665623
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Ainy, RN, & Barokah, Z. (2019). Corporate Governance, Environmental Responsibility and Firm Value: An Empirical Study in Indonesia and Malaysia. Journal of Accounting and Investment, 20(2). https://doi.org/10.18196/jai.2002117
Alareeni, B. A., & Hamdan, A. (2020). ESG impact on performance of US S&P 500-listed firms. Corporate Governance: The International Journal of Business in Society, 20(7), 1409–1428. https://doi.org/10.1108/CG-06-2020-0258
Ar, IM (2012). The Impact of Green Product Innovation on Firm Performance and Competitive Capability: The Moderating Role of Managerial Environmental Concern. Procedia - Social and Behavioral Sciences, 62, 854–864. https://doi.org/10.1016/j.sbspro.2012.09.144
Behl, A., Kumari, P.S.R., Makhija, H., & Sharma, D. (2022). Exploring the relationship of ESG score and firm value using cross-lagged panel analyses: Case of the Indian energy sector. Annals of Operations Research, 313(1), 231–256. https://doi.org/10.1007/s10479-021-04189-8
Buallay, A. (2019). Is sustainability reporting (ESG) associated with performance? Evidence from the European banking sector. Management of Environmental Quality: An International Journal, 30(1), 98–115. https://doi.org/10.1108/MEQ-12-2017-0149
Chen, Y.-S., & Chang, K.-C. (2013). The nonlinear effect of green innovation on corporate competitive advantage. Quality & Quantity, 47(1), 271–286. https://doi.org/10.1007/s11135-011-9518-x
Chen, Y.-S., Lai, S.-B., & Wen, C.-T. (2006). The Influence of Green Innovation Performance on Corporate Advantage in Taiwan. Journal of Business Ethics, 67(4), 331–339. https://doi.org/10.1007/s10551-006-9025-5
Chung, K. H., & Pruitt, S. W. (1994). A Simple Approximation of Tobin's q. Financial Management, 23(3), 70. https://doi.org/10.2307/3665623
Damas, D., Maghviroh, R.E., & Meidiyah, M. (2021). The Influence of Eco-Efficiency, Green Innovation and Carbon Emission Disclosure on Company Value with Environmental Performance as Moderation. Trisakti Master of Accounting Journal, 8(2), 85–108. https://doi.org/10.25105/jmat.v8i2.9742
Deegan, C., & Rankin, M. (1997). The materiality of environmental information to users of annual reports. Accounting, Auditing & Accountability Journal, 10(4), 562–583. https://doi.org/10.1108/09513579710367485
Dewi, R., & Rahmianingsih, A. (2020). Increasing Company Value Through Green Innovation and Eco-Efficiency. Expansion: Journal of Economics, Finance, Banking and Accounting, 12(2), 225–243. https://doi.org/10.35313/ekspansi.v12i2.2241
Freeman, R. E., & Reed, D. L. (1983). Stockholders and Stakeholders: A New Perspective on Corporate Governance. California Management Review, 25, 106–188.
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Mariyamah, M., & Handayani, S. (2020). The Effect of Green Innovation on Economic Performance with Environmental Management Accounting as a Moderating Variable. JOURNAL OF ACCOUNTING AND AUDITING, 16(2), 105–123. https://doi.org/10.14710/jaa.16.2.105-123
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Roza Mulyadi, & Maulana, R. (2022). The Influence of Green Innovation on Firm Value with Environmental Management Accounting as an Intervening Variable. Accounting and Management Journal, 6(2), 1–12. https://doi.org/10.33086/amj.v6i2.3325
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