Trade-off effect of ESG disclosure on financial performance: Mediating mechanism of efficiency and environmental performance

Aswari, Amalia and Fitriyah, Fitriyah ORCID: https://orcid.org/0009-0000-9402-9370 (2026) Trade-off effect of ESG disclosure on financial performance: Mediating mechanism of efficiency and environmental performance. Account: Jurnal Akuntasi, Keuangan dan Perbankan, 13 (1). pp. 2804-2817. ISSN 2549-0575

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Abstract

This study addresses inconsistent findings concerning the impact of Environmental, Social, and Governance (ESG) factors on corporate value, particularly in high-capital energy sectors. The research investigates the influence of ESG factors on financial performance, with environmental performance and operational efficiency as mediating variables, among energy companies listed on the Indonesia Stock Exchange from 2021 to 2024. A quantitative methodology employing path analysis was used, with a purposive sample of 22 companies (88 observations). Data were analyzed using the Random Effects Model for panel data regression and the Sobel test. The results show that ESG disclosure does not have a significant direct effect on either financial performance or environmental performance. Additionally, environmental performance does not significantly influence financial performance. In contrast, ESG factors have a significant negative effect on operational efficiency, while operational efficiency positively affects financial performance. Mediation analysis reveals that environmental performance does not mediate the relationship, whereas operational efficiency significantly mediates the link in a negative direction. These findings suggest a trade-off in which ESG implementation in the energy sector leads to a short-term decline in asset productivity, ultimately reducing profitability.

Item Type:	Journal Article
Keywords:	environmental social and governance; environmental performance; operational efficiency; financial performance; energy sector
Subjects:	15 COMMERCE, MANAGEMENT, TOURISM AND SERVICES > 1502 Banking, Finance and Investment > 150205 Investment and Risk Management
Divisions:	Faculty of Economics > Department of Management
Depositing User:	Fitriyah Fitriyah
Date Deposited:	17 Jul 2026 09:00

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