The impact of ESG scores on financial performance: Evidence from property and real estate firms listed on the Indonesia Stock Exchange (2020–2024)
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Raisya Gita Amalia(1*)
Department of Management, Faculty of Economics and Business, Semarang State University
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Rahmadani Nur Permanawati(2)
Department of Management, Faculty of Economics and Business, Semarang State University
(*) Corresponding Author
Keywords:
ESG Score, ROA, Financial Performance, Property and Real Estate Sector, Indonesia
Abstract
This study examines the effect of Environmental, Social, and Governance (ESG) performance on the financial performance of property and real estate companies listed on the Indonesia Stock Exchange during 2020–2024. A quantitative approach was employed using panel data regression analysis to assess the influence of the ESG Overall Score, Environmental Score (ESGE), Social Score (ESGS), and Governance Score (ESGG) on Return on Assets (ROA), with firm size and leverage included as control variables. The results indicate that the ESG Overall Score has a positive and significant effect on ROA, suggesting that firms with stronger ESG performance achieve higher profitability. Furthermore, the environmental, social, and governance dimensions each exhibit positive and significant relationships with financial performance, with the social dimension exerting the strongest influence. These findings support stakeholder theory, demonstrating that effective ESG practices enhance operational sustainability, strengthen stakeholder trust, and improve long-term competitiveness. This study extends the ESG literature by providing empirical evidence from Indonesia’s property and real estate sector and highlights the strategic importance of comprehensive ESG implementation in improving corporate financial performance.
Keywords: ESG Score; ROA;Financial Performance; Property and Real Estate Sector ;Indonesia
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References
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Alareeni, B. A., & Hamdan, A. (2020). ESG impact on performance of US S&P 500-listed firms. Corporate Governance (Bingley), 20(7), 1409–1428.
https://doi.org/10.1108/CG-06-2020-0258
Alhajjeah, D., Besim, M., & Al-Hajieh, H. (2025a). Mitigating crisis impact: The influence of corporate social responsibility on non-financial firms’ financial performance. International Review of Economics & Finance, 101, 104180.
https://doi.org/10.1016/J.IREF.2025.104180
Alhajjeah, D., Besim, M., & Al-Hajieh, H. (2025b). Mitigating crisis impact: The influence of corporate social responsibility on non-financial firms’ financial performance. International Review of Economics & Finance, 101, 104180.
https://doi.org/10.1016/J.IREF.2025.104180
Ali, S., Al-Nassar, N. S., Sindhu, M. I., & Naveed, M. (2025). Sustainable synergy: Static and dynamic nexus between ESG and BRICS equity markets. Research in International Business and Finance, 74, 102698. https://doi.org/10.1016/J.RIBAF.2024.102698
APREA. (2022). APREA ESG Guidebook for Real Assets in Asia Pacific, Asia Pacific Real Assets Association, Singapore.
Aydoğmuş, M., Gülay, G., & Ergun, K. (2022). Impact of ESG performance on firm value and profitability. In Borsa Istanbul Review (Vol. 22, pp. S119–S127). Borsa Istanbul Anonim Sirketi. https://doi.org/10.1016/j.bir.2022.11.006
Bagh, T., Hunjra, A. I., & Corbet, S. (2025). The impact of corporate governance on firm value: Understanding the role of strategic change. International Review of Economics & Finance, 103, 104472. https://doi.org/10.1016/J.IREF.2025.104472
Baltagi, B. H. (2021). Econometric_Analysis_of_Panel_Data (1).
Ben Amor, S., & Kooli, M. (2025). Does materiality matter in ESG investing? Research in International Business and Finance, 79, 103105.
https://doi.org/10.1016/J.RIBAF.2025.103105
Candio, P. (2024). The influence of ESG score on financial performance: Evidence from the European health care industry. Strategic Change, 33.
https://doi.org/10.1002/jsc.2594
Climate Policy Initiative. (2024). Financing Green Buildings in Indonesian Cities. CPI.
Erol, I., Unal, U., & Coskun, Y. (2023). ESG investing and the financial performance: a panel data analysis of developed REIT markets. Environmental Science and Pollution Research, 30(36), 85154–85169. https://doi.org/10.1007/s11356-023-28376-1
Freeman, R. E. (1984). Strategic_Management.
Helhel, A., Akgun, E., & Helhel, Y. (2024). Did ESG Affect the Financial Performance of North American Fast-Moving Consumer Goods Firms in the Second Period of the Kyoto Protocol? Sustainability (Switzerland), 16(22).
https://doi.org/10.3390/su162210009
Herman, A., Oplotnik, Ž. J., & Jagrič, T. (2025). The Impact of ESG on Business Performance: An Empirical Analysis of NASDAQ–NYSE-Listed Companies. Sustainability (Switzerland), 17(21). https://doi.org/10.3390/su17219683
Hu, H., Zhang, T., & Dong, H. (2025). The signaling power of ESG reports: How corporate sustainability disclosure shapes investment decisions in China. International Review of Financial Analysis, 109, 104691.
https://doi.org/10.1016/j.irfa.2025.104691
Husain, Mohd. F., Razali, M. N., Jasimin, T. H., & Abdul Hamid, M. Y. (2025). Assessing the impact of Environmental, Social and Governance (ESG) framework on the performance of listed real estate companies in Malaysia. Journal of Property Investment & Finance, 43(6), 649–671. https://doi.org/10.1108/JPIF-01-2025-0014
IDX. (2026). Indonesian Stock Exchange.
Jamaludin, A. F., Husain, M. F. H., & Razali, M. N. (2025). Assessing environmental, social and governance of property-listed companies in Malaysia. Property Management, 43(3), 469–489. https://doi.org/10.1108/PM-03-2024-0022
LPM FEB UI. (2023). Sekapur Sirih dari Kepala LPEM FEB UI.
Mandiri Institute. (2024). Ini Kendala Perusahaan Indonesia dalam Menerapkan ESG.
Mordor Intellegence. (2025). Indonesia Commercial Real Estate Market Size & Share Analysis - Growth Trends And Forecast (2026 - 2031) . Mordor Intellegence.
OJK. (2021). Otoritas Jasa Keuangan.
Sandberg, H., Alnoor, A., & Tiberius, V. (2023). Environmental, social, and governance ratings and financial performance: Evidence from the European food industry. Business Strategy and the Environment, 32(4), 2471–2489.
https://doi.org/10.1002/bse.3259
Song, J. (2024). Corporate ESG performance and human capital investment efficiency. Finance Research Letters, 62, 105239.
https://doi.org/10.1016/J.FRL.2024.105239
UNEP. (2022). United Nations Environment Programme (UNEP) (2022), “Global status report for buildings and construction: towards a zero-emission, efficient and resilient buildings and construction sector.”
Zhou, K. (2024). The Relationship Between Financial Performance And ESG: Evidence from Bloomberg. In Business, Economics and Management CMAM (Vol. 2024).
Published
2026-07-16
How to Cite
Amalia, R., & Permanawati, R. (2026). The impact of ESG scores on financial performance: Evidence from property and real estate firms listed on the Indonesia Stock Exchange (2020–2024). Journal of Management : Small and Medium Enterprises (SMEs), 19(2), 1517-1534. https://doi.org/10.35508/jom.v19i2.28547
Section
Articles
