PENGARUH ENVIRONMENTAL,SOCIAL, AND GOVERNANCE (ESG) PERFORMANCE TERHADAP COST OF DEBT PADA PERUSAHAAN MANUFAKTUR DI INDONESIA

This study aims to analyze the effect of Environmental, Social, and Governance (ESG) performance on the cost of debt in manufacturing companies listed on the Indonesia Stock Exchange (IDX). In recent years, ESG has increasingly been viewed as an important indicator in corporate risk assessment, but empirical evidence in developing countries still shows inconsistent results. This study uses a quantitative approach with panel data from manufacturing companies for the period 2017–2023. The study sample consisted of 26 companies selected using a purposive sampling technique. The analytical method used was panel data regression with a Random Effects Model (REM) and robust standard errors. The results show that ESG performance has a positive and significant effect on the cost of debt. This finding indicates that in the context of manufacturing companies in Indonesia, ESG implementation is not yet fully perceived by creditors as a risk reduction mechanism but is still viewed as an activity that has the potential to increase the company's costs and funding needs. This study provides an empirical contribution to the sustainable finance literature in emerging markets and offers practical implications for companies and regulators in improving the quality of ESG implementation and reporting.