Trend Analysis Of ESG Disclosure On Green Finance Performance In Indonesia, Malaysia & Singapore Exchanges
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Abstract
Green Finance in the banking sector is a new issue in the financial world because it is considered capable of increasing economic growth, by conserving natural resources so that economic development continues to be sustainable. This study aims to determine what factors affect financial performance in disclosing ESG items, so that company management can imply the results of this study which are expected to provide direct or indirect benefits for companies in the banking sector. The author collects independent variables related to the research, namely operational performance, financial performance, with firm value as an intervening variable. The population of this study is the banking sector companies listed on the Indonesia, Malaysia and Singapore Stock Exchanges. This study uses quantitative methods with secondary data using multivariate analysis with a structural equation modeling-partial least square (SEM-PLS) approach. The main challenge in implementing green investment is the lack of incentives from the government and stakeholders. This is indicated by the results of the H1 study; H3; H4; H6; H7 has a significant result because it has a p value below 0.05. While H2; H3; H5; H8; H9; H10 has an insignificant result because it has a p value above 0.05. Responding to the challenges of sustainable finance requires policy tools from various relevant ministries and institutions. Suggestions for future researchers are to try to re-examine using other test tools, such as SPSS or eviews.
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References
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Ahmadi, A., & Bouri, A. (2017). The relationship between financial attributes, environmental performance and environmental disclosure. Management of Environmental Quality: An International Journal, 28(4), 490–506. https://doi.org/10.1108/MEQ-07-2015-0132
Boffo, R., and R. P. (2020). ES G I nvesting : Practices, Progress an d C hallenges. OECD Paris,. https://www.oecd.org/finance/ESG-Investing-Practices-Progress-Challenges.pdf
Boldeanu, F. T. (2022). Is ESG Relevant to Electricity Companies during Pandemics? A Case Study on European Firms during COVID-19. Sustainability (Switzerland), 14(2). https://doi.org/10.3390/su14020852
Brooks, C., & Oikonomou, I. (2018). The effects of environmental, social and governance disclosures and performance on firm value: A review of the literature in accounting and finance. British Accounting Review, 50(1), 1–15. https://doi.org/10.1016/j.bar.2017.11.005
Cahya, K. D. (2018). The Effect of Roa and Roe On Company Value With Sustainability Reporting As An Intervening Variable In Companies Listed in Lq 45. Journal of Accounting and Business Studies, 3(1), 46.
Chang, H. Y. (2021). Using environmental, social, governance (ESG) and financial indicators to measure bank cost efficiency in Asia. Sustainability (Switzerland), 13(20). https://doi.org/10.3390/su132011139
Chang, Y. (2019). Asian Development Bank Institute. 915.
Chauhan, Y., & Kumar, S. B. (2019). The value relevance of nonfinancial disclosure: Evidence from foreign equity investment. Journal of Multinational Financial Management, 52–53, 100595. https://doi.org/https://doi.org/10.1016/j.mulfin.2019.100595
Chiu, A. A., Chen, L. N., & Hu, J. C. (2020). A study of the relationship between corporate social responsibility report and the stock market. Sustainability (Switzerland), 12(21), 1–18. https://doi.org/10.3390/su12219200
Durana, M. (2020). Sustainability Reporting: A Literature Review. Available at SSRN 3608500. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3608500
Durugbo, C., & Amankwah‐Amoah, J. (2019). Global sustainability under uncertainty: How do multinationals craft regulatory policies? … Social Responsibility and … . https://doi.org/10.1002/csr.1764
Elkington, J. (2013). Enter the triple bottom line. The Triple Bottom Line: Does It All Add Up, 1(1986), 1–16. https://doi.org/10.4324/9781849773348
Ferriani, F., & Natoli, F. (2021). ESG risks in times of Covid-19. Applied Economics Letters, 28(18), 1537–1541. https://doi.org/10.1080/13504851.2020.1830932
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Jayaram, J., & Avittathur, B. (2015). Green supply chains: A perspective from an emerging economy. International Journal of Production Economics, 164, 234–244. https://doi.org/https://doi.org/10.1016/j.ijpe.2014.12.003
La Torre, M., Leo, S., & Panetta, I. C. (2021). Banks and environmental, social and governance drivers: Follow the market or the authorities? Corporate Social Responsibility and Environmental Management, 28(6), 1620–1634. https://doi.org/10.1002/csr.2132
Lien, N. T. H., Phong, N. D., & Dung, V. T. T. (2019). A study of the relationship between company characteristics and the level of disclosure on sustainability reporting of listed firms in mining, manufacturing and …. In Socio-Economic and … . researchgate.net. https://www.researchgate.net/profile/Doan-Tri-2/publication/332970322_Socio-economic_and_Environmental_Issues_in_Development/links/5cd422cba6fdccc9dd98979f/Socio-economic-and-Environmental-Issues-in-Development.pdf#page=108
Nafisah, N. I., Halim, A., & Sari, A. R. (2020). Effect of Return on Assets (Roa), Debt To Equity Ratio(Der), Current Ratio (Cr), Return on Equity (Roe), Price Earning Ratio (Per), Total Assets Turnover (Tattoo), And Earning Per Share (Eps) On The Value Of Bei Listed Manufacturing Companies. Journal of Accounting Student Research, 6(2), 1–17. https://doi.org/10.21067/jrma.v6i2.4217
Nyarku, K. M., Ayekple, S., Nyarku, K. M., & Ayekple, S. (2018). Influence of corporate social responsibility on non- financial performance. https://doi.org/10.1108/SRJ-04-2017-0059
Princess, M. A. (2017). The Effect of CSR Cost, Environmental Disclosure, and Sustainability Report on Company Financial Performance (Empirical Study on ... . repository.stieykpn.ac.id. http://repository.stieykpn.ac.id/337/
Romano, M., Tandberg, J., & Pørksen, L. S. (2020). IS DOING GOOD EQUIVALENT TO DOING WELL? research.cbs.dk. https://research.cbs.dk/files/66776066/1051602_Thesis_102368_125285.pdf
Saufi, N. A. A., Daud, S., & Hassan, H. (2016). Green Growth and Corporate Sustainability Performance. Procedia Economics and Finance, 35, 374–378. https://doi.org/https://doi.org/10.1016/S2212-5671(16)00046-0
Shaydurova, A., Panova, S., Fedosova, R., & Zlotnikova, G. (2018). Investment attractiveness of “Green” financial instruments. Journal of Reviews on Global Economics, 7(Special Issue), 710–715. https://doi.org/10.6000/1929-7092.2018.07.65
Shubiri, F. N. A.-, Al-abedallat, A. Z., Mohammad, M., & Orabi, A. (n.d.). FINANCIAL AND NON FINANCIAL DETERMINANTS OF CORPORATE SOCIAL RESPONSIBILITY. 2(8), 1001–1012.
Siahaan, C., Silalahi, A. S., Syahyunan, & Sianipar, A. S. (2021). Analysis of Green Banking Sustainability Implementation and Financial Performance towards Banking Profitability Listed on the Indonesia Stock Exchange in 2012-2018. Journal of Management Analytical and Solution, 1(1), 1–12.
Singh, V., & Sharma, S. K. (2016). Analyzing the moderating effects of respondent type and experience on the fuel efficiency improvement in air transport using structural equation modeling. European Transport Research Review, 8(2). https://doi.org/10.1007/s12544-016-0199-3
Takahashi, H. (2021). When the Japanese stock market meets COVID-19: Impact of ownership, China and US exposure, and ESG channels. International Review of Financial Analysis, 74. https://doi.org/10.1016/j.irfa.2021.101670
Thomas, C. J., Tuyon, J., Matahir, H., & Dixit, S. (2020). ANALYSIS OF CORPORATE SUSTAINABILITY PRACTICE AND IMPACTS TO CORPORATE VALUES IN MALAYSIA: DATA VISUALIZATION APPROACH. In International Journal of … . ijafb.com. http://www.ijafb.com/PDF/IJAFB-2020-30-12-11.pdf
Ur Rehman, R., Zhang, J., Uppal, J., Cullinan, C., & Akram Naseem, M. (2016). Are environmental social governance equity indices a better choice for investors? An Asian perspective. Business Ethics, 25(4), 440–459. https://doi.org/10.1111/beer.12127
Uyar, A., Kilic, M., Koseoglu, M. A., Kuzey, C., & Karaman, A. S. (2020). The link among board characteristics, corporate social responsibility performance, and financial performance: Evidence from the hospitality and tourism industry. Tourism Management Perspectives, 35, 100714. https://doi.org/https://doi.org/10.1016/j.tmp.2020.100714
Volz, U. (2018). FOSTERING GREEN FINANCE FOR Asian Development Bank Institute. 814.
Wachira, M., & Berndt, T. (2016). The State of Sustainability Reporting (SR) in Sub-Saharan Africa: An Application of the Consolidated Narrative Interrogation (CONI) Method. Available at SSRN 2970422. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2970422
Wang, Y., & Zhi, Q. (2016). The role of green finance in environmental protection : Two aspects of market mechanism and policies. Energy Procedia, 104, 311–316. https://doi.org/10.1016/j.egypro.2016.12.053
Weber, O. (2014). Environmental, social and governance reporting in China. Business Strategy and the Environment, 23(5), 303–317. https://doi.org/10.1002/bse.1785
Wisler, A. K., Utami, W., Andania, N. P., Yadnya, I. P., Oncioiu, I., Petrescu, A. G., Bîlcan, F. R., Petrescu, M., Popescu, D. M., Anghel, E., Ching, H. Y., Gerab, F., Toste, T. H., Jayakumar, S., Suprabha, K. R., Silva, P. O. D., Anizar, O., Hubbard, G., Meutia, I., … Sa’adah, L. (2021). A review of the theories of corporate social responsibility: Its evolutionary path and the road ahead. Sustainability (Switzerland), 10(1), 53–73. https://doi.org/10.1111/j.1468-2370.2007.00226.x
Wood, A. (2011). Canada and the Green Economy. 1–16. http://socialfinance.ca/uploads/documents/Canada_and_the_Green_Economy_Wood_CEGN_April26.pdf%5Cnpapers2://publication/uuid/63E8529B-D083-4E3B-B3C8-2B59D66CBF86
Yeow, K. E., & Ng, S.-H. (2021). The impact of green bonds on corporate environmental and financial performance. Managerial Finance, 47(10), 1486–1510. https://doi.org/10.1108/MF-09-2020-0481
Yoo, S., Keeley, A. R., & Managi, S. (2021). Does sustainability activities performance matter during financial crises? Investigating the case of COVID-19. Energy Policy, 155(April). https://doi.org/10.1016/j.enpol.2021.112330
Yoo, S., & Managi, S. (2022). Disclosure or action: Evaluating ESG behavior towards financial performance. Finance Research Letters, 44(May), 102108. https://doi.org/10.1016/j.frl.2021.102108
Ahmadi, A., & Bouri, A. (2017). The relationship between financial attributes, environmental performance and environmental disclosure. Management of Environmental Quality: An International Journal, 28(4), 490–506. https://doi.org/10.1108/MEQ-07-2015-0132
Boffo, R., and R. P. (2020). ES G I nvesting : Practices, Progress an d C hallenges. OECD Paris,. https://www.oecd.org/finance/ESG-Investing-Practices-Progress-Challenges.pdf
Boldeanu, F. T. (2022). Is ESG Relevant to Electricity Companies during Pandemics? A Case Study on European Firms during COVID-19. Sustainability (Switzerland), 14(2). https://doi.org/10.3390/su14020852
Brooks, C., & Oikonomou, I. (2018). The effects of environmental, social and governance disclosures and performance on firm value: A review of the literature in accounting and finance. British Accounting Review, 50(1), 1–15. https://doi.org/10.1016/j.bar.2017.11.005
Cahya, K. D. (2018). The Effect of Roa and Roe On Company Value With Sustainability Reporting As An Intervening Variable In Companies Listed in Lq 45. Journal of Accounting and Business Studies, 3(1), 46.
Chang, H. Y. (2021). Using environmental, social, governance (ESG) and financial indicators to measure bank cost efficiency in Asia. Sustainability (Switzerland), 13(20). https://doi.org/10.3390/su132011139
Chang, Y. (2019). Asian Development Bank Institute. 915.
Chauhan, Y., & Kumar, S. B. (2019). The value relevance of nonfinancial disclosure: Evidence from foreign equity investment. Journal of Multinational Financial Management, 52–53, 100595. https://doi.org/https://doi.org/10.1016/j.mulfin.2019.100595
Chiu, A. A., Chen, L. N., & Hu, J. C. (2020). A study of the relationship between corporate social responsibility report and the stock market. Sustainability (Switzerland), 12(21), 1–18. https://doi.org/10.3390/su12219200
Durana, M. (2020). Sustainability Reporting: A Literature Review. Available at SSRN 3608500. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3608500
Durugbo, C., & Amankwah‐Amoah, J. (2019). Global sustainability under uncertainty: How do multinationals craft regulatory policies? … Social Responsibility and … . https://doi.org/10.1002/csr.1764
Elkington, J. (2013). Enter the triple bottom line. The Triple Bottom Line: Does It All Add Up, 1(1986), 1–16. https://doi.org/10.4324/9781849773348
Ferriani, F., & Natoli, F. (2021). ESG risks in times of Covid-19. Applied Economics Letters, 28(18), 1537–1541. https://doi.org/10.1080/13504851.2020.1830932
Gillan, S. L., Koch, A., & Starks, L. T. (2021). Firms and social responsibility: A review of ESG and CSR research in corporate finance. Journal of Corporate Finance, 66, 101889. https://doi.org/https://doi.org/10.1016/j.jcorpfin.2021.101889
Hair, J. F., Risher, J. J., Sarstedt, M., & Ringle, C. M. (2019). When to use and how to report the results of PLS-SEM. European Business Review, 31(1), 2–24. https://doi.org/10.1108/EBR-11-2018-0203
Hossen, S. M. S. (2018). Newcastle Graduate School of Business Faculty of Business & Law. nova.newcastle.edu.au. https://nova.newcastle.edu.au/vital/access/services/Download/uon:33980/ATTACHMENT01
Jayaram, J., & Avittathur, B. (2015). Green supply chains: A perspective from an emerging economy. International Journal of Production Economics, 164, 234–244. https://doi.org/https://doi.org/10.1016/j.ijpe.2014.12.003
La Torre, M., Leo, S., & Panetta, I. C. (2021). Banks and environmental, social and governance drivers: Follow the market or the authorities? Corporate Social Responsibility and Environmental Management, 28(6), 1620–1634. https://doi.org/10.1002/csr.2132
Lien, N. T. H., Phong, N. D., & Dung, V. T. T. (2019). A study of the relationship between company characteristics and the level of disclosure on sustainability reporting of listed firms in mining, manufacturing and …. In Socio-Economic and … . researchgate.net. https://www.researchgate.net/profile/Doan-Tri-2/publication/332970322_Socio-economic_and_Environmental_Issues_in_Development/links/5cd422cba6fdccc9dd98979f/Socio-economic-and-Environmental-Issues-in-Development.pdf#page=108
Nafisah, N. I., Halim, A., & Sari, A. R. (2020). Effect of Return on Assets (Roa), Debt To Equity Ratio(Der), Current Ratio (Cr), Return on Equity (Roe), Price Earning Ratio (Per), Total Assets Turnover (Tattoo), And Earning Per Share (Eps) On The Value Of Bei Listed Manufacturing Companies. Journal of Accounting Student Research, 6(2), 1–17. https://doi.org/10.21067/jrma.v6i2.4217
Nyarku, K. M., Ayekple, S., Nyarku, K. M., & Ayekple, S. (2018). Influence of corporate social responsibility on non- financial performance. https://doi.org/10.1108/SRJ-04-2017-0059
Princess, M. A. (2017). The Effect of CSR Cost, Environmental Disclosure, and Sustainability Report on Company Financial Performance (Empirical Study on ... . repository.stieykpn.ac.id. http://repository.stieykpn.ac.id/337/
Romano, M., Tandberg, J., & Pørksen, L. S. (2020). IS DOING GOOD EQUIVALENT TO DOING WELL? research.cbs.dk. https://research.cbs.dk/files/66776066/1051602_Thesis_102368_125285.pdf
Saufi, N. A. A., Daud, S., & Hassan, H. (2016). Green Growth and Corporate Sustainability Performance. Procedia Economics and Finance, 35, 374–378. https://doi.org/https://doi.org/10.1016/S2212-5671(16)00046-0
Shaydurova, A., Panova, S., Fedosova, R., & Zlotnikova, G. (2018). Investment attractiveness of “Green” financial instruments. Journal of Reviews on Global Economics, 7(Special Issue), 710–715. https://doi.org/10.6000/1929-7092.2018.07.65
Shubiri, F. N. A.-, Al-abedallat, A. Z., Mohammad, M., & Orabi, A. (n.d.). FINANCIAL AND NON FINANCIAL DETERMINANTS OF CORPORATE SOCIAL RESPONSIBILITY. 2(8), 1001–1012.
Siahaan, C., Silalahi, A. S., Syahyunan, & Sianipar, A. S. (2021). Analysis of Green Banking Sustainability Implementation and Financial Performance towards Banking Profitability Listed on the Indonesia Stock Exchange in 2012-2018. Journal of Management Analytical and Solution, 1(1), 1–12.
Singh, V., & Sharma, S. K. (2016). Analyzing the moderating effects of respondent type and experience on the fuel efficiency improvement in air transport using structural equation modeling. European Transport Research Review, 8(2). https://doi.org/10.1007/s12544-016-0199-3
Takahashi, H. (2021). When the Japanese stock market meets COVID-19: Impact of ownership, China and US exposure, and ESG channels. International Review of Financial Analysis, 74. https://doi.org/10.1016/j.irfa.2021.101670
Thomas, C. J., Tuyon, J., Matahir, H., & Dixit, S. (2020). ANALYSIS OF CORPORATE SUSTAINABILITY PRACTICE AND IMPACTS TO CORPORATE VALUES IN MALAYSIA: DATA VISUALIZATION APPROACH. In International Journal of … . ijafb.com. http://www.ijafb.com/PDF/IJAFB-2020-30-12-11.pdf
Ur Rehman, R., Zhang, J., Uppal, J., Cullinan, C., & Akram Naseem, M. (2016). Are environmental social governance equity indices a better choice for investors? An Asian perspective. Business Ethics, 25(4), 440–459. https://doi.org/10.1111/beer.12127
Uyar, A., Kilic, M., Koseoglu, M. A., Kuzey, C., & Karaman, A. S. (2020). The link among board characteristics, corporate social responsibility performance, and financial performance: Evidence from the hospitality and tourism industry. Tourism Management Perspectives, 35, 100714. https://doi.org/https://doi.org/10.1016/j.tmp.2020.100714
Volz, U. (2018). FOSTERING GREEN FINANCE FOR Asian Development Bank Institute. 814.
Wachira, M., & Berndt, T. (2016). The State of Sustainability Reporting (SR) in Sub-Saharan Africa: An Application of the Consolidated Narrative Interrogation (CONI) Method. Available at SSRN 2970422. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2970422
Wang, Y., & Zhi, Q. (2016). The role of green finance in environmental protection : Two aspects of market mechanism and policies. Energy Procedia, 104, 311–316. https://doi.org/10.1016/j.egypro.2016.12.053
Weber, O. (2014). Environmental, social and governance reporting in China. Business Strategy and the Environment, 23(5), 303–317. https://doi.org/10.1002/bse.1785
Wisler, A. K., Utami, W., Andania, N. P., Yadnya, I. P., Oncioiu, I., Petrescu, A. G., Bîlcan, F. R., Petrescu, M., Popescu, D. M., Anghel, E., Ching, H. Y., Gerab, F., Toste, T. H., Jayakumar, S., Suprabha, K. R., Silva, P. O. D., Anizar, O., Hubbard, G., Meutia, I., … Sa’adah, L. (2021). A review of the theories of corporate social responsibility: Its evolutionary path and the road ahead. Sustainability (Switzerland), 10(1), 53–73. https://doi.org/10.1111/j.1468-2370.2007.00226.x
Wood, A. (2011). Canada and the Green Economy. 1–16. http://socialfinance.ca/uploads/documents/Canada_and_the_Green_Economy_Wood_CEGN_April26.pdf%5Cnpapers2://publication/uuid/63E8529B-D083-4E3B-B3C8-2B59D66CBF86
Yeow, K. E., & Ng, S.-H. (2021). The impact of green bonds on corporate environmental and financial performance. Managerial Finance, 47(10), 1486–1510. https://doi.org/10.1108/MF-09-2020-0481
Yoo, S., Keeley, A. R., & Managi, S. (2021). Does sustainability activities performance matter during financial crises? Investigating the case of COVID-19. Energy Policy, 155(April). https://doi.org/10.1016/j.enpol.2021.112330
Yoo, S., & Managi, S. (2022). Disclosure or action: Evaluating ESG behavior towards financial performance. Finance Research Letters, 44(May), 102108. https://doi.org/10.1016/j.frl.2021.102108
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2023-01-03
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