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Uncovering the Nexus Between Corporate Governance and Environmental, Social, and Governance (ESG) Score of Indonesia-Listed Companies Assessed by Sustainalytics

In: Proceedings of the International Conference on Sustainable Collaboration in Business, Technology, Information, and Innovation (SCBTII 2024)

Author

Listed:
  • Rr. Sri Saraswati

    (Telkom University, School of Economics and Business)

  • Dwi Urip Wardoyo

    (Telkom University, School of Economics and Business)

  • Givanny Yusti Wulandari

    (Telkom University, School of Economics and Business)

Abstract

ESG Score measurement by the Sustainalytics institute, in collaboration with the Indonesia Stock Exchange (IDX), started in 2023. This study analyzes how corporate governance affects the ESG scores of companies assessed by Sustainalytics, addressing inconsistencies in previous research, and contributing to studies in Indonesia. The research object is unique due to its assessed ESG score, necessitating further investigation into the influencing factors. This study examines the factors influencing the ESG score of companies assessed by Sustainalytics, focusing on corporate governance aspects: board diligence, board gender diversity, and board size, with company age and size as control variables. The sample consists of 78 observations. The multiple regression analysis was conducted. The findings of this study show that board gender diversity has a negative effect on ESG scores, while board diligence and board size show no effect. Future research can explore other variables that affect ESG scores, such as financial ratios and green investments. Companies should consider these governance factors in their evaluations, and investors can use ESG scores from independent institute as criteria for investment decisions.

Suggested Citation

  • Rr. Sri Saraswati & Dwi Urip Wardoyo & Givanny Yusti Wulandari, 2024. "Uncovering the Nexus Between Corporate Governance and Environmental, Social, and Governance (ESG) Score of Indonesia-Listed Companies Assessed by Sustainalytics," Advances in Economics, Business and Management Research, in: Suhal Kusairi & Forget Mingiri Kapingura & Putri Fariska Sugestie & Nizam Ahmat (ed.), Proceedings of the International Conference on Sustainable Collaboration in Business, Technology, Information, and Innovation (SCBTII 2024), pages 370-386, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6463-558-4_22
    DOI: 10.2991/978-94-6463-558-4_22
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