KnE Social Sciences

Published date: Sep 16 2025

Journal Title: KnE Social Sciences

Issue title: The Mercu Buana Ecobiz Energy International Conference: Sustainability and ESG Reporting in the Energy Sector

Pages: 113 - 126

DOI: 10.18502/kss.v10i21.19697

Wiwik Utamiwiwik.utami@mercubuana.ac.idUniversitas Mercu Buana, Jakarta

Rieke PernamasariUniversitas Mercu Buana, Jakarta

Mariyam ChairunisaUniversitas Mercu Buana, Jakarta

Rini MarcellaUniversitas Mercu Buana, Jakarta

Sustainable development has become a global commitment, particularly vital in the energy sector due to its susceptibility to environmental, social, and governance (ESG) issues. Despite compliance with regulations, the impact of ESG on performance remains unclear, as many companies implement ESG merely to fulfill regulatory requirements. This research aims to empirically determine whether the quality of ESG implementation enhances competitiveness and subsequently influences investment performance in Indonesia’s energy sector. A causal research design was employed, with competitiveness as a mediating variable and investment performance as the dependent variable. The study sample comprises 15 energy sector companies listed on the Indonesia Stock Exchange from 2018 to 2022, selected based on ESG data availability via Bloomberg. We measure the ESG quality by disclosure scores, competitiveness by the return on invested capital (ROIC) divided by the weighted average cost of capital (WACC), and investment performance by return on assets (ROA). We analyze data using multiple regression with mediation by EViews software. The study finds that environmental performance implementation positively influences competitiveness, enhancing investment performance, the social and governance not positive significant. The findings provide valuable insights for policymakers and industry practitioners on the importance of environmental practices in achieving sustainable competitiveness and investment returns. This research contributes to the literature by empirically demonstrating the mediating role of competitiveness in the relationship between environmental performance and investment performance in the energy sector.

Keywords: ESG, competitiveness, return on assets, energy sector, Indonesia

[1] Nations U. Industry, innovation and infrastructure. 2019.

[2] Nations U. Transforming our world: the 2030 Agenda for Sustainable. General Assembly on 25 September 2015. 2015.

[3] Aly E, Elsawah S, Ryan MJ. A review and catalogue to the use of models in enabling the achievement of sustainable development goals (SDG). J Clean Prod. 2022;340:130803.

[4] Yeh SC, Hsieh YL, Yu HC, Tseng YH. The Trends and Content of Research Related to the Sustainable Development Goals: A Systemic Review. Appl Sci (Basel). 2022;12(13):6820.

[5] Nations U. The Sustainable Development Goals Report. 2022.

[6] Hunjra AI, Azam M, Bruna MG, Bouri E. A cross-regional investigation of institutional quality and sustainable development. J Int Financ Mark Inst Money. 2023;84:84.

[7] Rohendi H, Ghozali I, Ratmono D. Environmental, social, and governance (ESG) disclosure and firm value: the role of competitive advantage as a mediator [Internet]. Cogent Bus Manag. 2024;11(1):2297446.

[8] Barney J. Firm Resources and Sustained Competitive Advantage. J Manage. 1991;17(1):99–120.

[9] Rabaya AJ, Saleh NM. The moderating effect of IR framework adoption on the relationship between environmental, social, and governance (ESG) disclosure and a firm’s competitive advantage [Internet]. Environ Dev Sustain. 2022;24(2):2037–55.

[10] Andes SL, Nuzula NF, Worokinasih S. Competitive Advantage as Mediating Factor for Creating Firm Value: A Literature Review. BISNIS BIROKRASI J Ilmu Adm dan. Organ. 2020;27(1).

[11] Kardung M, Cingiz K, Costenoble O, Delahaye R, Heijman W, Lovrić M, et al. Development of the circular bioeconomy: drivers and indicators. Sustainability (Basel). 2021;13(1):1–24.

[12] Indonesia CR. Survei Nasional ESG 2019 [Internet]. 2019. Available from: https://babel.bps.go.id/indicator/26/959/1/persentase-rumah-tangga-dengankepemilikan- aset-dan-jenis-aset-yang-dimiliki.html

[13] Wang H, Li J. The Impact of Corporate Social Responsibility on Firm Competitiveness: The Mediating Role of Firm Reputation. J Bus Ethics. 2016;133(3):639–51.

[14] Miller D, Thompson E, Johnson B. Social issues and their limited impact on firm value in the energy sector. Energy Policy. 2021;149:112345.

[15] Smith A, Brown B, Johnson C. The role of social issues in determining firm value: A study in the energy sector. J Environ Manage. 2020;268:110123.

[16] Bhagat S, Bolton B, Subramanian A. Corporate governance and firm performance: the impact of board structure. J Corp Finance. 2019;58:108–28.

[17] Larcker DF, Tayan B. Corporate governance matters: A closer look at organizational choices and their consequences. Bus Horiz. 2021;58(6):635–46.

[18] Beiner S, Drobetz W, Schmid MM, Zimmermann H. An integrated framework of corporate governance and firm valuation. Eur Financ Manag. 2019;22(1):69–103.

[19] Yoon B, Lee JH, Byun R. Does ESG Performance Enhance Firm Value? Evidence from Korea. Sustainability (Basel). 2018;10(3635):1–18.

[20] Abdi Y, Li X, Càmara-Turull X. Exploring the impact of sustainability (ESG) disclosure on firm value and financial performance (FP) in airline industry: the moderating role of size and age [Internet]. Environ Dev Sustain. 2022;24(4):5052–79.

[21] Mohammad WM, Wasiuzzaman S. Environmental, Social and Governance (ESG) disclosure, competitive advantage and performance of firms in Malaysia [Internet]. Clean Environ Syst. 2021;2(February):100015.

[22] Sigalas C, Pekka Economou V. Revisiting the concept of competitive advantage: problems and fallacies arising from its conceptualization. J Strategy Manag. 2013;6(1):61–80.

[23] Koller T, Goedhart M, Wessels D. Valuation: Measuring and Managing the Value of Companies. 6th ed. Hoboken: Wiley; 2015.

[24] Ghozali I. Mediasi dan Moderasi Dalam Analisis Statistik. Semarang: Yoga Pratama; 2019.

[25] Utami W, Setiany E, Hidayah N, Azhar Z. Sustainability Reporting Quality and Corporate Value: indonesia and Malaysia Context. J Law Sustain Dev [Internet]. 2024;12(1):e2239. Available from: https://ojs.journalsdg.org/jlss/article/view/2239

[26] Hidayah N, Azhar Z, Setiany E, Utami W, Tarmidi D. Determinants of ERM quality and its impact on company value. BTP [Internet]. 2024;25(1):11–23. Available from: https://bmee.vgtu.lt/index.php/BTP/article/view/19302 https://doi.org/10.3846/ btp.2024.19302.

[27] Knights C. Corporate Knights Report 2023 [Internet]. Available from: https://www.corporateknights.com/reports-landing-page/

[28] Keuangan OJ. Suku Bunga Dasar April 2024 [Internet]. Available from: https://ojk.go.id/id/kanal/perbankan/pages/suku-bunga-dasar.aspx

[29] Setiany E, Utami W, Zamzami AH. Firm value: competitive position and corporate governance during the COVID-19 pandemic [Special issue]. J Gov Regul. 2023;12(3):266–73.

[30] Brammer S, Brooks C, Pavelin S. The impact of corporate social responsibility on firm performance: misalignment of CSR activities and firm strategy. J Bus Res. 2020;118:441–50.

[31] Martinez I, Fernandez L, Gomez D. Governance practices and their limited effect on firm performance: A study in the manufacturing sector. Energy Policy. 2021;149:112401.

[32] Agrawal A, Knoeber CR. Corporate governance and firm performance: evidence from the industrial sector. J Corp Finance. 2019;58:140–52.