Environmental performance and financial performance: Empirical evidence from Indonesian companies

This study aims to investigate the effect of Audit Committee, firm characteristics, and ISO 14001 on environmental performance. Also, this study analyzes the effect of environmental performance on the financial performance. The data analysis was performed using multiple linear regression Data collection techniques are carried out using annual reports of companies receiving PROPER Award and listed on the Indonesia Stock Exchanges in the year of 2015-2019. The results showed that Audit Committee, firm characteristics, and ISO 14001 significantly influenced environmental performance. Another result is that environmental performance has a positive effect on the financial performance. This study contributes as a reference for the government to make environmental policies so as to encourage the achievement of sustainable development goals (SDGs). This study measures environmental performance using only PROPER which cannot be generalized to all companies listed on the Indonesia Stock Exchanges and other markets. The next studies should use other proxies to measure environmental performance and use other data collection methods such as interviews.

Automated summary

This study investigates the impact of Audit Committee, firm characteristics, and ISO 14001 on environmental performance. It also analyzes the influence of environmental performance on financial performance. The research employs multiple linear regression for data analysis and collects data from the annual reports of companies receiving PROPER Award and listed on the Indonesia Stock Exchanges from 2015 to 2019. The results indicate that Audit Committee, firm characteristics, and ISO 14001 significantly affect environmental performance. Moreover, environmental performance positively influences financial performance. This study contributes as a reference for government in formulating environmental policies towards achieving sustainable development goals (SDGs).