The Power Of ESG: Logistic Analysis Of Sustainability-Driven Investment Decisions In Emerging Markets
Year: 2025
Type: article
Abstract: Introduction: Sustainability is increasingly becoming a major concern in global investment, especially in the energy sector, which faces intense pressure from stakeholders to improve transparency and accountability. Environmental, Social, and Governance (ESG) has emerged as a strategic indicator that goes beyond traditional financial performance in assessing a company's long-term risk and attractiveness. Objective: This study aims to analyse the effect of ESG performance on sustainable investment decisions in Indonesian energy companies, considering financial variables as control factors. Method: This study uses a quantitative approach with logistic regression analysis on 155 observations of energy companies during the period 2019–2023. The main independent variable is the ESG score, while the control variables include Return on Assets (ROA), Return on Equity (ROE), Debt to Equity Ratio (DER), and company size. Results: The results show that ESG has a positive and significant effect on sustainable investment, as indicated by a high odds ratio value. DER was found to have a significant negative effect, while ROA, ROE, and company size had no significant effect on investment decisions. Conclusion: These findings confirm that ESG performance is a more decisive strategic factor than traditional financial indicators in attracting long-term investment in the energy sector. This study contributes to the ESG literature in emerging markets and suggests strengthening ESG reporting and green investment policies in Indonesia.
Source: Management
DOI: 10.62486/agma2025305
Authors: Hermaya Ompusunggu, Helmi Yazid, Lia Uzliawati, Imam Abu Hanifah
Institution: Sultan Ageng Tirtayasa University
Language: English
Subfield: Strategy and Management
Domain: Social Sciences
Open Access status: diamond
OpenAlex ID: W4414584168