ESG and Environmental Performance: Multiple Mediation Models of Green Accounting and CSR Disclosure

Abstract

Sustainability is a major theme in current academic research due to various issues such as the energy crisis, global warming, and environmental damage. This sustainability issue led to an increase in the role of environmental, social, and governance (ESG) in improving the quality of environmental management by companies. However, research on this topic is still limited with inconsistent findings. This study aims to examine the effect of ESG on environmental performance by using the mediating variables of green accounting and corporate social responsibility (CSR) disclosure. This study contributes by developing a multiple mediating model. The sample consisted of 114 firms-years observations of mining and manufacturing companies in Indonesia during the 2017-2022 period. The results show that ESG has a positive effect on the application of green accounting and CSR disclosure. Both mediation variables can improve environmental performance. In addition, ESG can also have a positive effect directly on environmental performance. These results provide empirical evidence of the importance of ESG implementation in the context of sustainability. The results of mediation testing show that CSR disclosure can act as a partial mediator so as to show support for signaling theory and the dominant role of impression management in environmental performance ranking.