The Effect of Environmental, Social, and Governance Performance on Sustainable Growth Rates

Abstract

The objective of this study is to provide empirical evidence of the impact of environmental, social, and governance (ESG) performance on SGR. The population used in this study consists of companies listed on the Indonesia Stock Exchange (IDX). Purposive sampling was selected to determine the sample size based on the desired criteria; a sample of 47 companies on the IDX was obtained by conducting observations over the 2020–2024 period, yielding a total of 188 observation data points. The warPLS approach was used to analyze the data. Based on the observation process, the results indicate that among environmental performance, social performance, and governance performance, only governance performance influences SGR. The implications of this study suggest that SGR plays a crucial role in corporate strategies aimed at achieving sustainable growth. Therefore, SGR and the underlying factors must be prioritized. On the other hand, this study can assist regulators in developing policies to promote sustainable business growth in Indonesia.