The Impact of Corporate Social Responsibility, Environmental, Social, and Governance (ESG), and Sustainability on Financial Performance in Manufacturing Companies for the Period 2020-2024
DOI:
https://doi.org/10.35870/jemsi.v12i5.7059Keywords:
Corporate Social Responsibility, Environmental, Social and Governance, Sustainability, Financial PerformanceAbstract
The purpose of this study was to assess the impact of Sustainability, Environmental, Social, and Governance (ESG), and Corporate Social Responsibility (CSR) on Financial Performance. Using the partial least squares-structural equation modeling (PLS-SEM) approach, this study offers a thorough examination of the reciprocal correlations between these variables. The empirical findings show that Financial Performance is positively and significantly impacted by Corporate Social Responsibility. This suggests that open disclosure of social activities may increase the value of a company by improving its reputation, acquiring legitimacy in the eyes of the public, and cultivating more amicable relationships with stakeholders. The use of ESG principles was also shown to have a favorable and significant positive impact on Financial Performance, where responsible environmental management, social responsibility, and good governance are strategic elements that can increase business profitability. However, it was discovered that Sustainability factors do not significantly affect short-term Financial Performance success. This suggests that the advantages of sustainable measures are not yet completely represented in conventional accounting metrics since their economic benefits tend to accumulate over time. Based on these results, the research suggests that businesses are enhancing the caliber and scope of their application of ESG principles and CSR in all management decision-making processes and operational activities. Companies must continue these sustainable practices as a long-term strategic investment to guarantee competitiveness, corporate value, and company resilience even when the effects of sustainability are not immediately apparent.
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