THE EFFECT OF TANGIBLE ASSETS AND GREEN INTELLECTUAL CAPITAL ON PROFITABILITY: THE MEDIATING ROLE OF ESG PERFORMANCE (STUDY ON GO PUBLIC COMPANIES IN INDONESIA)
DOI:
https://doi.org/10.33102/ck83zg48Keywords:
Tangible Assets, Green Intellectual Capital, ESG Performance, ProfitabilityAbstract
Integrating sustainable practices into business strategies is essential for enhancing economic performance and mitigating environmental impacts. In Indonesia, where economic growth and environmental sustainability are critical, this study examines the impact of tangible assets (TA) and green intellectual capital (GIC) on the profitability of publicly listed companies. The research investigates how tangible assets and green intellectual capital influence company profitability through the mediating role of ESG (Environmental, Social, Governance) performance. The study uses a dataset of 363 observations from 122 companies listed on the Indonesia Stock Exchange from 2020 to 2023. Path analysis is employed using RStudio to examine the relationships between tangible assets, green intellectual capital, ESG performance, and profitability (measured by ROA). The findings reveal a significant positive relationship between tangible assets and ESG performance, indicating that companies with substantial tangible assets are better equipped to implement sustainable practices. However, GIC does not show a significant direct impact on ESG performance or profitability (ROA). The mediation analysis underscores the critical role of ESG performance in enhancing profitability, demonstrating a significant positive effect on ROA. This suggests that ESG practices are essential in translating tangible and intellectual resources into financial gains. Despite the non-significant direct effects of GIC, its contribution through improved ESG performance highlights the importance of integrating green intellectual capital into corporate strategies for long-term profitability and sustainability. These findings offer valuable insights for corporate managers and policymakers, emphasizing the need for investments in tangible assets and green intellectual capital to foster sustainable practices and improve financial outcomes. The research underscores the importance for companies to focus on corporate social responsibility, environmental, and governance practices. Implementing ESG concepts helps companies build a good reputation, attract investors, achieve operational efficiency, and ensure long-term sustainability. This study supports the implementation of robust ESG frameworks to achieve both economic and environmental goals.
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