HOW DOES ECO–EFFICIENCY IMPROVE FIRM FINANCIAL PERFORMANCE? AN EMPIRICAL EVIDENCE FROM INDONESIAN SOEs

Year 2020, Volume: 3 Issue: 2, 15 - 24, 01.07.2021

Vera Safitri Dhiona Ayu Nani

Abstract

The efforts to preserve environmental sustainability need to be noticed by industrial sector since natural resources are limited, therefore it is important for companies to manage natural resources more effectively and efficiently (eco-efficiency) in the company's business processes, in order to maintain their business life cycle. This study aims to examine the relationship between eco-efficiency with environmental performance and firm financial performance. This study consisted of 18 state-owned enterprises listed on the Indonesia Stock Exchange in 2015-2019. SOEs was chosen because it is considered as a company that represents the government/regulator. The results show that eco-efficiency has a positive and significant relationship to environmental performance and firm financial performance. This means that increased eco-efficiency is effective for improving environmental performance and firm financial performance. In addition, the company's environmental performance also has a positive and significant relationship with the firm financial performance.

Keywords

eco-efficiency, firm environmental performance, firm financial performance

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