Ketika ESG Disclosure Tidak Berdampak: Bukti Empiris dan Peran Risiko Kredit terhadap Profitabilitas Perbankan

Abstract

Objective: This study focuses on the impact of Environmental, Social, and Governance (ESG) and credit risk on banking profitability. The background of this research is based on the increasing importance of sustainable business practices in the banking sector and the importance of asset quality in determining financial performanceDesign/Method/Approach: The sampling were conducted based on secondary data. The research subjects consisted of banking companies listed on the Indonesia Stock Exchange (IDX) during the 2020–2024 period. The sample was determined using a purposive sampling technique, resulting in 146 observational data. Data processing was performed using multiple linear regression using SPSS version 27. Research Results: The results of this research indicate that Environmental, Social, and Governance disclosures do not significantly impact profitability. Conversely, credit risk has been shown to significantly impact banking profitability. Theoretical Contribution: This research provides empirical evidence that credit risk plays a more dominant role than ESG in explaining banking profitability. Contribution to practice/policy: The findings of this study emphasize the importance of credit risk management for improving bank profitability. Limitations: This study is limited by the relatively small coefficient of determination and the lack of use of control or moderating variables.