Firm Value through Independent Board Directors for Environmental Sustainability: A Study of Firms in Indonesia

The increasing concern over climate change has made environmental issues a top priority. Industries and natural resource exploration must prioritize environmental safety to meet regulatory requirements and investor preferences. This shift towards environmental sustainability has led to a greater focus on environmental awareness in various sectors. Companies are now expected to demonstrate a commitment to environmental responsibility to enhance investor confidence. This study investigates the impact of independent board directors on firm performance measured by Tobin's q and the influence of Environmental, Social, and Governance (ESG) factors on Return on Assets (ROA). Tobin's q and ROA are key metrics that investors consider when evaluating companies. Investors today not only seek profitability but also value companies that prioritize ESG principles. The study included control variables such as firm size and age in the analysis. Panel regression was employed to assess the relationship between independent board directors, ESG factors, and company performance. The results show that independent board directors have a positive impact on Tobin's q, with firm size positively affecting firm value and firm age negatively affecting it. ESG Risk Rating also influences firm performance, as companies that prioritize ESG factors signal their good reputation and attract quality employees, ultimately enhancing productivity