Morning Sustainalytics: Environmental, Social, Governance and Financial Leverage Risk Ratings on the Financial Performance of Mining Companies in Indonesia

Abstract

This research investigates the influence of Environmental, Social and Governance (LST) Risk Ratings on the Financial Performance of mining companies in Indonesia. The financial performance of this research is focused on return on assets (ROA). This research design uses associative quantitative. The population of this research is mining companies in Indonesia, which are listed on the Indonesian Stock Exchange (BEI). The sample from the population was selected using a selection approach, namely mining companies that had complete disclosure of ESG Risk Rating information from Morning Sustainalytics and comprehensive financial reports and did not record losses in consecutive financial reports in the 2019-2022 period. Statistical research results show a 95% confidence level that both ESG Risk Rating and Financial Leverage negatively impact financial performance (ROA) in mining companies in Indonesia. ROA is influenced by Risk Rating ESG, which implies that a mining company implements sustainable practices or has a P Risk Rating. Good ESG _ or low tends to achieve better financial performance. The finding that there is a statistically significant influence between ESG assessments and the economic success of general mining companies in Indonesia indicates that environmental, social and corporate governance factors have a measurable impact on the financial performance of these mining companies.