Relationship between Financial Performance ESG Score: An Empirical Analysis of Listed Companies on Indonesia Stock Exchange

This study investigates the relationship between financial performance—capital expenditure (CapEx) and revenue growth—and Environmental, Social, and Governance (ESG) scores in manufacturing companies listed on the Indonesia Stock Exchange (IDX). A panel data regression analysis was conducted using data from 21 firms selected through purposive sampling for 2018–2022. The results show that revenue growth significantly impacts ESG scores, with a coefficient of 1.023 (p = 0.026). This suggests that firms with higher revenue growth are more likely to achieve better ESG performance due to their greater financial flexibility to invest in sustainability initiatives. In contrast, CapEx negatively affects ESG scores, with a coefficient of -0.0014 (p = 0.037). This indicates that higher CapEx does not necessarily align with improved ESG performance, as such expenditures are often directed toward projects that may overlook environmental and social considerations. The findings underscore the importance of aligning financial strategies with sustainability goals. Companies experiencing strong revenue growth demonstrate better capacity to support ESG integration, while high CapEx investments, if not strategically aligned with sustainability, may hinder ESG progress. This study contributes to the literature on financial performance and ESG, offering insights for corporate decision-makers to balance growth and sustainability in their strategies.