PENGARUH KINERJA ESG TERHADAP GREEN INNOVATION PADA PERUSAHAAN MANUFAKTUR DI INDONESIA DENGAN REGULASI PEMERINTAH SEBAGAI VARIABEL MODERASI

The manufacturing sector is one of the sectors that contributes significantly to economic growth, but it also has the potential to cause environmental pollution due to high energy consumption and production waste. This situation has prompted companies to adopt green innovation as a means of creating more environmentally friendly processes and products. To support these efforts, the implementation of Environmental, Social, and Governance (ESG) principles has become a key corporate strategy for enhancing business sustainability. This study aims to examine the effect of ESG performance on green innovation, with government regulations (PROPER) serving as a moderating variable, among manufacturing companies in Indonesia.
The variables used include ESG performance as the independent variable, green innovation as the dependent variable, and government regulations as the moderating variable. This study employs a quantitative approach using panel data from 39 manufacturing companies listed on the Indonesia Stock Exchange for the period 2019- 2023 (195 observations). Data analysis was conducted using the Random Effects Model (REM) and Moderated Regression Analysis (MRA) with robust standard errors.
The results indicate that ESG performance has a positive and significant effect on green innovation, suggesting that the higher a company’s ESG performance, the higher its level of green innovation. Meanwhile, government regulations were not found to moderate the effect of ESG performance on green innovation. The implications of this study highlight the importance of integrating ESG into corporate strategy as a key driver of green innovation, as well as the need to strengthen environmental regulatory mechanisms in Indonesia’s manufacturing sector.