When Risk Management and Regulation Shape ESG Performance Links in Indonesian Mining and Energy

Specifically, this paper examines the influence of ESG orientation on perceived financial performance (PFP) in Indonesia’s mining and energy sector with an emphasis on identifying risk management effectiveness (RME) as a mediator and regulatory pressure (REG) as a moderator. Based on the ResourceBased View, Dynamic Capabilities, and Institutional Theory we tested a moderated mediation model based on survey data from 143 respondents of 50 publicly listed companies in coal, nickel, oil & gas, other metals subsectors. Data segmentTree were analyzed by partial least squares structural equation modeling (PLS-SEM) using SmartPLS 4. The findings demonstrate that the ESG orientation has a positive impact on PFP through not only directly but also indirectly RME. The mediation effect shows that RME acts as an important bridging capability converting the adoption of ESG into better performance implications. Furthermore, the moderation analysis confirms that regulatory pressure strengthens the relationship between RME and PFP, thereby amplifying the indirect effect of ESG orientation on financial performance. This study contributes to the ESG– performance literature by integrating organisational capabilities and institutional context, thereby extending prior research beyond simple correlational approaches. Practically, the results underscore the importance for firms to embed ESG practices into enterprise risk management frameworks and highlight the enabling role of regulatory institutions in ensuring that ESG commitments yield substantive financial benefits. The findings offer actionable insights for corporate managers and policymakers seeking to advance sustainable business practices in emerging market contexts.