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

Rr. Sri Saraswati, Dwi Urip Wardoyo and Givanny Yusti Wulandari ()
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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

A chapter in Proceedings of the International Conference on Sustainable Collaboration in Business, Technology, Information, and Innovation (SCBTII 2024), 2024, pp 370-386 from Springer

Abstract: 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.

Keywords: Board diligence; Board gender diversity; Board size; ESG (search for similar items in EconPapers)
Date: 2024
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DOI: 10.2991/978-94-6463-558-4_22

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