THE INFLUENCE OF ENVIRONMENTAL, SOCIAL, AND GOVERNANCE PRACTICES ON THE FINANCIAL PERFORMANCE OF LISTED COMPANIES IN ESG100: THE MODERATING ROLE OF CORPORATE GOVERNANCE PRACTICES

Abstract

This study aims to analyze the influence of Environmental, Social, and Governance (ESG) practices on the return on equity (ROE) of listed companies included in the ESG100 group. Secondary data were collected from 706 firm-year observations of listed companies during the period 2017-2024, and the analysis employed both descriptive and inferential statistical methods. ESG was divided into three components: Corporate Social Responsibility (CSR), Anti-Corruption (AC), and Sustainable Development Goals (SDG). The results reveal that Anti-Corruption (AC) has a positive and statistically significant relationship with ROE, whereas CSR and SDG show no significant association with ROE. However, when considering ESG as a whole in conjunction with Corporate Governance (CG), the findings indicate that ESG has a significant positive effect on ROE, and CG also exhibits a positive influence on ROE. Nevertheless, the interaction coefficient between ESG and CG is negative. These findings highlight the important role of both ESG and CG in enhancing financial performance.