ESG Score and Financial Performance in Indonesian Energy Companies: The Moderating Role of Digital Transformation

Abstract

This study examines the influence of ESG Score on the financial performance of Indonesian energy companies, with Digital Transformation as a moderating variable. Theoretically, the study is grounded in Stakeholder Theory and the Resource-Based View (RBV), emphasizing ESG as a strategic element for long-term value creation. Using a causal quantitative design and secondary data, the final sample consists of 8 energy firms (24 firm-year observations) listed on the Indonesia Stock Exchange during 2021–2023. Regression analysis with classical assumption tests was applied. The findings show that ESG Score does not significantly affect Return on Assets (ROA), and Digital Transformation, measured by a dummy proxy, does not strengthen this relationship. While results are statistically insignificant, they highlight that ESG implementation in Indonesian remains compliance-driven rather than value-oriented, and that digitalization in the energy sector is still at an early stage without measurable financial outcomes. These insights contribute to the ongoing debate on ESG in emerging markets and stress the need for policy frameworks, stronger regulatory enforcement, and more strategic integration of ESG and digitalization in corporate governance. The study is exploratory in nature due to its limited sample and short observation period. The contribution of this research lies in providing empirical evidence from an emerging market context, showing that ESG in Indonesia remains compliance-driven, and highlighting the role of digital transformation as an early-stage, efficiency-focused practice. This study enriches ESG literature in developing countries and offers implications for policymakers, investors, and corporate managers in designing sustainability strategies.