The Influence of Environmental Costs and Environmental Performance on Financial Performance of Food and Beverage Companies Listed on the Indonesia Stock Exchange (Jurnal Semesta Ilmu Manajemen dan Ekonomi)

Summary

• The study examines the effect of environmental costs and environmental performance on the financial performance of food and beverage companies listed on the Indonesia Stock Exchange.p.1
• Purposive sampling over 2019–2023 produced 12 companies with a total of 60 analytical units.p.1
• Environmental performance is measured by ISO 14001 certification and financial performance by Net Profit Margin (NPM), using panel data regression in EViews 12.p.1
• In the sample, 29 of 60 observations were ISO 14001 certified.p.6
• The random effect model reports an R-squared of 0.301462.p.7
• Environmental costs have a significant negative effect on profitability, while environmental performance has a significant positive effect on financial performance.p.10

Key insights

1. Higher environmental costs relative to profit are associated with lower net profit margin in the regression model, holding other variables constant.p.8
2. Environmental costs can suppress profit when their economic benefits are not immediately felt.p.8
3. Environmental performance, measured by ISO 14001 certification, is positively and significantly linked to financial performance.p.10
4. The findings are limited to a sample of 12 food and beverage companies over 2019 to 2023.p.10
5. Environmental performance is measured only by ISO 14001 certification and financial performance only by NPM.p.10
6. Companies are advised to allocate environmental costs more effectively and strengthen environmental management systems.p.10