SUSTAINABLE SUCCESS: HOW ENVIRONMENTAL PERFORMANCE DRIVES PROFITABILITY:  A CASE STUDY IN SRI-KEHATI COMPANIES

Wardhiah; Rico Nur Ilham; Marzuki

doi:10.54443/jaruda.v3i2.201

Authors

Wardhiah Universitas Malikussaleh
Rico Nur Ilham Universitas Malikussaleh
Marzuki Universitas Malikussaleh

DOI:

https://doi.org/10.54443/jaruda.v3i2.201

Keywords:

Financial Performance, Environmental Performance, Environmental Disclosure, ISO 14001, Environmental Costs

Abstract

The background of this research is based on the importance of environmental performance in improving the Company's image and seemingly towards sustainable profitability. This study aims to determine the influence of environmental performance on company profitability. This study uses a quantitative method with secondary data from the Company's financial statements. The data collection technique is carried out through documentation analysis, while the data analysis uses panel data analysis using E-Views. The population in this study consists of all companies listed in the SRI-Kehati Index, as many as 25 companies with a saturated sampling method that produces 75 observations. The results of the study show that partially, Environmental performance, ISO 14001 Certificate, and Environmental Cost have a positive and significant influence on the profitability of the Company. The conclusion of this study is to provide insight for managers and stakeholders about the importance of environmental performance in achieving the Company's financial performance.

References

Acar, E., Tunca Çalıyurt, K., & Zengin-Karaibrahimoglu, Y. (2021). Does ownership type affect environmental disclosure? International Journal of Climate Change Strategies and Management, 13(2), 120–141. https://doi.org/10.1108/IJCCSM-02-2020-0016

Ahmad, N., Mobarek, A., & Roni, N. N. (2021). Revisiting the impact of ESG on financial performance of FTSE350 UK firms: Static and dynamic panel data analysis. Cogent Business and Management, 8(1). https://doi.org/10.1080/23311975.2021.1900500

Akhter, F., Hossain, M. R., Elrehail, H., Rehman, S. U., & Almansour, B. (2023). From the lens of legitimacy theory, environmental disclosures and corporate attributes: a longitudinal analysis on a developing country. European Journal of Management and Business Economics, 32(3), 342–369. https://doi.org/10.1108/EJMBE-01-2021-0008

Amankwah‐Amoah, J., Danso, A., & Adomako, S. (2019). Entrepreneurial orientation, environmental sustainability, and new venture performance: Does stakeholder integration matter? Business Strategy and the Environment, 28(1), 79–87. https://doi.org/10.1002/bse.2191

Bresciani, S., Puertas, R., Ferraris, A., & Santoro, G. (2021). Innovation, environmental sustainability, and economic development: DEA-Bootstrap and multilevel analysis to compare two regions. Technological Forecasting and Social Change, 172, 121040. https://doi.org/10.1016/j.techfore.2021.121040

Fatmawatie, N., & Endri, E. (2022). Implementation of the principles of financial governance in service companies. Journal of Governance and Regulation, 11(4), 33–45. https://doi.org/10.22495/jgrv11i4art4

Khan, H. ur R., Usman, B., Zaman, K., Nassani, A. A., Haffar, M., & Muneer, G. (2022). Carbon pricing, climate financing, and financial literacy impact COVID-19 cases: go-for-green healthcare policies. Environmental Science and Pollution Research, 29(24), 35884–35896. https://doi.org/10.1007/s11356-022-18689-y

Kosmas, P., & Ioakimoglou, E. (2023). Determinants of profitability in the economy of the Republic of Cyprus based on a classical Marxist approach. International Review of Applied Economics, 37(6), 767–780. https://doi.org/10.1080/02692171.2023.2281458

Malik, S. Y., Mughal, Y. H., Azam, T., Cao, Y., Wan, Z., Zhu, H., & Thurasamy, R. (2021). Corporate social responsibility, green human resources management, and sustainable performance: is organizational citizenship behavior towards environment the missing link? Sustainability (Switzerland), 13(3), 1–24. https://doi.org/10.3390/su13031044

Mandagie, W. C., Susanto, K. P., Endri, E., & Wiwaha, A. (2024). Corporate governance, financial performance, and sustainability disclosure: Evidence from Indonesian energy companies. Uncertain Supply Chain Management, 12(3), 1791–1800. https://doi.org/10.5267/j.uscm.2024.3.003

Rehman, S. U., Bresciani, S., Yahiaoui, D., & Giacosa, E. (2022). Environmental sustainability orientation and corporate social responsibility influence on the environmental performance of small and medium enterprises: The mediating effect of green capability. Corporate Social Responsibility and Environmental Management, 29(6), 1954–1967. https://doi.org/10.1002/csr.2293

Rodríguez-Espíndola, O., Cuevas-Romo, A., Chowdhury, S., Díaz-Acevedo, N., Albores, P., Despoudi, S., Malesios, C., & Dey, P. (2022). The role of circular economy principles and sustainable-oriented innovation to enhance social, economic and environmental performance: Evidence from Mexican SMEs. International Journal of Production Economics, 248(March), 108495. https://doi.org/10.1016/j.ijpe.2022.108495

Santosa, P. W., Aprilia, O., & Tambunan, M. E. (2020). The intervening effect of the dividend policy on financial performance and firm value in large Indonesian firms. International Journal of Financial Research, 11(4), 408–420. https://doi.org/10.5430/ijfr.v11n4p408

Scarpellini, S., Marín-Vinuesa, L. M., Aranda-Usón, A., & Portillo-Tarragona, P. (2020). Dynamic capabilities and environmental accounting for the circular economy in businesses. Sustainability Accounting, Management and Policy Journal, 11(7), 1129–1158. https://doi.org/10.1108/SAMPJ-04-2019-0150

Wang, Q., Xu, X., & Liang, K. (2021). The impact of environmental regulation on firm performance: Evidence from the Chinese cement industry. Journal of Environmental Management, 299, 113596. https://doi.org/10.1016/j.jenvman.2021.113596

Zheng, J., Khurram, M. U., & Chen, L. (2022). Can Green Innovation Affect ESG Ratings and Financial Performance? Evidence from Chinese GEM Listed Companies. Sustainability (Switzerland), 14(14), 1–32. https://doi.org/10.3390/su14148677