Eco-Efficiency And Financial Performance: An Evidence From Indonesian Listed Company (Using The Emissions Intensity Approach)

Abstract

Purpose: This study aims to examine the effect of eco-efficiency on the company's financial performance. This study uses natural resource-based theory to provide empirical evidence regarding the effect of sustainability policies in the form of emission reductions on the financial performance of companies listed on the Indonesia Stock Exchange. Methodology/approach: The concept of eco-efficiency is measured using the emission intensity approach. This study uses a period of data panels from 2019 to 2021 to capture the effect of eco-efficiency on the company's financial performance. Using three accounting measures of financial performance in the research model: ROA, ROE, and ROS, to understand in more detail the impact of eco-efficiency on the company's financial performance. Findings: This study finds that eco-efficiency positively impacts financial performance. This finding implies that the fewer Green House Gas emissions produced, the higher the company's financial performance. Practical implications: These findings prove to the company that emission reduction policies can positively impact the company's financial performance. Originality/value: This study uses a measure of eco-efficiency that is different from previous research by measuring eco-efficiency in the context impact on the environment from company operations through the emissions produced by the company.