Assessing of ESG Scores on Carbon Performance: Moderating Role of Board Independence

Novy Fajriati; Dini Wahjoe Hapsari

doi:10.24912/ja.v30i1.3471

Authors

Novy Fajriati Program Studi Akuntansi, Fakultas Ekonomi dan Bisnis, Universitas Telkom
Dini Wahjoe Hapsari Program Studi Akuntansi, Fakultas Ekonomi dan Bisnis, Universitas Telkom

DOI:

https://doi.org/10.24912/ja.v30i1.3471

Keywords: ESG; Carbon Emissions Performance; Board Independence.

Abstract

This study is motivated by the rising levels of carbon emissions and the increasing importance of ESG practices as mechanisms for enhancing corporate environmental performance. It investigates whether board independence moderates the relationship between ESG scores and carbon emission performance, using panel data from 81 companies listed on the Indonesia Stock Exchange between 2022 and 2024 and secondary data are obtained from the Refinitiv Eikon database. The study applies moderated regression analysis, estimated using EViews. The results indicate that ESG scores have a significant positive impact on carbon emission performance, suggesting that higher ESG scores are associated with improved carbon outcomes. In contrast, board independence has a negative effect. Additionally, board independence does not significantly moderate the relationship between ESG and carbon emission performance, implying that it is an inadequate governance mechanism for strengthening the impact of ESG practices.

Author Biographies

Novy Fajriati, Program Studi Akuntansi, Fakultas Ekonomi dan Bisnis, Universitas Telkom

novyfajriatinf@telkomuniversity.ac.id

Dini Wahjoe Hapsari, Program Studi Akuntansi, Fakultas Ekonomi dan Bisnis, Universitas Telkom

dinihapsari@telkomuniversity.ac.id

References

Akhtar, P., Ghafar, A., Noordin, N. A., & Alajlani, S. (2025). Sustaining Success: The Critical Mediating Role of Supply Chain Sustainability. In Studies in Big Data (164, 141–151). https://doi.org/10.1007/978-3-031-75095-3_11.

Alandejani, M., & Al-Shaer, H. (2023). Macro Uncertainty Impacts on ESG Performance and Carbon Emission Reduction Targets. Sustainability (Switzerland), 15(5). https://doi.org/10.3390/su15054249.

Albarrak, M. S., Elnahass, M., & Salama, A. (2019). The Effect Of Carbon Dissemination On Cost Of Equity. Business Strategy and the Environment, 28(6), 1179–1198. https://doi.org/10.1002/bse.2310.

Alkurdi, A., Al Amosh, H., & Khatib, S. F. A. (2024). The Mediating Role Of Carbon Emissions In The Relationship Between The Board Attributes And ESG Performance: European Evidence. EuroMed Journal of Business, 19(4), 1016–1041. https://doi.org/10.1108/EMJB-08-2022-0144.

Baratta, A., Cimino, A., Longo, F., Solina, V., & Verteramo, S. (2023). The Impact of ESG Practices in Industry with a Focus on Carbon Emissions: Insights and Future Perspectives. In Sustainability (Switzerland) 15(8). MDPI. https://doi.org/10.3390/su15086685.

Barros, F. E. E., Santos, R. C., Orso, L. E., & Sousa, A. M. R. (2020). The Evolution Of Corporate Governance And Agency Control: The Effectiveness Of Mechanisms In Creating Value For Companies With IPO On The Brazilian Stock Exchange. Corporate Governance (Bingley), 21(5), 775–814. https://doi.org/10.1108/CG-11-2019-0355.

Benkraiem, R., Shuwaikh, F., Lakhal, F., & Guizani, A. (2022). Carbon Performance And Firm Value Of The World’s Most Sustainable Companies. Economic Modelling, 116. https://doi.org/10.1016/j.econmod.2022.106002.

Cao, Z., & Rees, W. (2020). Do Employee-Friendly Firms Invest More Efficiently? Evidence From Labor Investment Efficiency. Journal of Corporate Finance, 65. https://doi.org/10.1016/j.jcorpfin.2020.101744.

Cardillo, M. A. dos R., & Basso, L. F. C. (2025). Revisiting Knowledge On ESG/CSR And Financial Performance: A Bibliometric And Systematic Review Of Moderating Variables. Journal of Innovation and Knowledge, 10(1). https://doi.org/10.1016/j.jik.2024.100648.

Celentano, A., Lepore, L., Pisano, S., D’Amore, G., & Alvino, F. (2020). The Joint Effect Of Board Independence And CSR Committee On CSR Disclosure: Evidence From Italian Listed Companies. Corporate Ownership and Control, 17(4, Special Issue), 319–328. https://doi.org/10.22495/cocv17i4siart9.

Chen, X., Fu, Q., & Chang, C. P. (2021). What Are The Shocks Of Climate Change On Clean Energy Investment: A Diversified Exploration. Energy Economics, 95. https://doi.org/10.1016/j.eneco.2021.105136.

Cong, Y., Zhu, C., Hou, Y., Tian, S., & Cai, X. (2022). Does ESG Investment Reduce Carbon Emissions In China? Frontiers in Environmental Science, 10. https://doi.org/10.3389/fenvs.2022.977049.

Dang, V. A., Gao, N., & Yu, T. (2025). Environmental Regulation and Access to Credit. British Journal of Management, 36(1), 303–322. https://doi.org/10.1111/1467-8551.12848.

Deng, X., Li, W., & Ren, X. (2023). More Sustainable, More Productive: Evidence From ESG Ratings And Total Factor Productivity Among Listed Chinese Firms. Finance Research Letters, 51. https://doi.org/10.1016/j.frl.2022.103439.

Ding, H., Wang, Z., Xu, H., & Lin, Z. (2024). A Study on the Impact of Board Characteristics on the Environmental, Social, and Governance (ESG) Responsibilities of Listed Companies—Evidence from Chinese Listings. Sustainability (Switzerland), 16(23). https://doi.org/10.3390/su162310490.

Ding, X., & Tseng, C.-J. (2023). Relationship Between ESG Strategies And Financial Performance Of Hotel Industry In China: An Empirical Study. Nurture, 17(3), 439–454. https://doi.org/10.55951/NURTURE.V17I3.366.

Dzeraviaha, I. (2023a). The Impact Of Firm Size On Environmental Sustainability: The Assessment Based On The Analysis Of Cost Structure. Business Strategy & Development, 6(1), 20–32. https://doi.org/https://doi.org/10.1002/bsd2.221.

Dzeraviaha, I. (2023b). The Impact Of Firm Size On Environmental Sustainability: The Assessment Based On The Analysis Of Cost Structure. Business Strategy and Development, 6(1), 20–32. https://doi.org/10.1002/bsd2.221

Elago, A. S., Capangpangan, A. T., Sabino, M. J., Gacho, S., Marcelo, J., & Catamco, E. (2025). Influence Of GHG Emissions Intensity And ESG Scores On The Financial Performance Of Publicly Listed Companies In The ASEAN Region. CRSUSF Critical Issue of Sustainable Future CRSUSF, 1(2), 1–19. https://doi.org/10.61511/crsusf.v2i1.1816.

Elsayih, J., Datt, R., & Tang, Q. (2021). Corporate Governance And Carbon Emissions Performance: Empirical Evidence From Australia. Australasian Journal of Environmental Management, 28(4), 433–459. https://doi.org/10.1080/14486563.2021.1989066.

Endrikat, J., de Villiers, C., Guenther, T. W., & Guenther, E. M. (2021). Board Characteristics and Corporate Social Responsibility: A Meta-Analytic Investigation. Business and Society, 60(8), 2099–2135. https://doi.org/10.1177/0007650320930638.

Firmino, A. L., & Peixoto, F. M. (2025). The Impact Of ESG Performance On Greenhouse Gas Emission Performance In Latin America. Revista Contabilidade e Financas, 36(97). https://doi.org/10.1590/1808-057x20242089.en

Ghozali, I., & Ratmono, D. (2020). Analisis Multivariat dan Ekonometrika Teori, Konsep, dan Aplikasi dengan Eviews 10 (2nd ed.). Semarang: Badan Penerbit Universitas Diponegoro.

Gibson, R. B., Glossner, S., Krueger, P., Matos, P., & Steffen, T. (2022). Do Responsible Investors Invest Responsibly? Review of Paper, 26(6), 1389–1432. https://doi.org/http://dx.doi.org/10.2139/ssrn.3525530.

Grau Grau, A., Bel-Oms, I., & Núñez-Almonte, J. (2025). Board Structure and ESG Performance: The Moderating Role of Country-Level Gender Parity. Corporate Social Responsibility and Environmental Management. https://doi.org/10.1002/csr.70067.

Gravel, S. (2023). ESC Risk Management Can Be A Differentiator For Mining Companies. Canadian Mining Journal, 144(5), 9–10. https://www.scopus.com/inward/record.uri?eid=2-s2.0-85173255247&partnerID=40&md5=5010bb160cc40f6ecb45594983e24ee2.

Hapsari, D. W., Budiharjo, R., Pratomo, D., & Yazid, H. (2025). Profitability in Linking Governance Structure and Firm Value. Jurnal Akuntansi, 29(2), 206–224. https://doi.org/10.24912/ja.v29i2.2421.

Hertz, S., Rozen, H., & Fried, A. N. (2024). Implications of Pension and Other Post-Retirement Benefits (OPRB) Recognition Biases on Leverage Ratio Components. Review of Pacific Basin Financial Markets and Policies, 27(03), 2450020. https://doi.org/10.1142/S0219091524500206.

Honma, S., Ushifusa, Y., Okamura, S., & Vandercamme, L. (2023). Measuring Carbon Emissions Performance Of Japan’s Metal Industry: Energy Inputs, Agglomeration, And The Potential For Green Recovery Reduction. Resources Policy, 82. https://doi.org/10.1016/j.resourpol.2023.103519.

Ihbal, A., Ifada, L. M., Suhendi, C., & Winarsih, W. (2024). The Role Of Board Composition And Board Attendance In Enhancing Esg Performance. In Studies in Systems, Decision and Control. (525, 329–337). https://doi.org/10.1007/978-3-031-54383-8_25.

Jamil, N. N., & Wahyuni, E. T. (2025). ESG Score and Carbon Emission: Empirical Evidence in Malaysian Listed Companies. International Journal of Research and Innovation in Social Science (IJRISS), IX(XV), 638–649. https://doi.org/10.47772/IJRISS.

Jarboui, A., Mnif, E., Akrout, Z., & Chakroun, S. (2025). Unveiling The Drivers Behind Carbon Emissions Disclosure: An ESG Perspective. Society and Business Review. https://doi.org/10.1108/SBR-05-2024-0161.

Kamarudin, K. A., Hassan, N. H., & Wan Ismail, W. A. (2024). Breaking The Linear Mould: Exploring The Non-Linear Relationship Between Board Independence And Investment Efficiency. Managerial Finance, 50(6), 1037–1065. https://doi.org/10.1108/MF-08-2023-0482.

Khandelwal, V., Tripathi, P., Chotia, V., Srivastava, M., Sharma, P., & Kalyani, S. (2023). Examining The Impact Of Agency Issues On Corporate Performance: A Bibliometric Analysis. Journal of Risk and Financial Management, 16(12). https://doi.org/10.3390/jrfm16120497.

Kijkasiwat, P., Hussain, A., & Mumtaz, A. (2022). Corporate Governance, Firm Performance and Financial Leverage across Developed and Emerging Economies. Risks, 10(10). https://doi.org/10.3390/risks10100185.

Kim, S. J., Kim, H., & Atukeren, E. (2023). Effects of Board Independence on Greenhouse Gas Emissions and Financial Consequences: Evidence from South Korea. Environments - MDPI, 10(3). https://doi.org/10.3390/environments10030056.

Kong, X., Li, Z., & Lei, X. (2024). Research On The Impact Of ESG Performance On Carbon Emissions From The Perspective Of Green Credit. Scientific Reports, 14(1). https://doi.org/10.1038/s41598-024-61353-3.

Koseoglu, M. A., Arici, H. E., Saydam, M. B., & Olorunsola, V. O. (2024). Environmental, Social And Governance Assets And Diversity Scores: Exploring Their Relationship To Carbon Emissions In Global Companies. Management Decision. https://doi.org/10.1108/MD-05-2023-0818.

Li, J., & Xu, X. (2024). Can ESG Rating Reduce Corporate Carbon Emissions? – An Empirical Study From Chinese Listed Companies. Journal of Cleaner Production, 434. https://doi.org/10.1016/j.jclepro.2023.140226.

Li, S., Ao, X., Zhang, M., & Pu, M. (2024b). ESG Performance And Carbon Emission Intensity: Examining The Role Of Climate Policy Uncertainty And The Digital Economy In China’s Dual-Carbon Era. Frontiers in Environmental Science, 12. https://doi.org/10.3389/fenvs.2024.1526681.

Lopes de Sousa Jabbour, A. B., Chiappetta Jabbour, C. J., Sarkis, J., Latan, H., Roubaud, D., Godinho Filho, M., & Queiroz, M. (2021). Fostering Low-Carbon Production And Logistics Systems: Framework And Empirical Evidence. International Journal of Production Research, 59(23), 7106–7125. https://doi.org/10.1080/00207543.2020.1834639.

Luo, L., & Tang, Q. (2023). The Real Effects Of ESG Reporting And GRI Standards On Carbon Mitigation: International Evidence. Business Strategy and the Environment, 32(6), 2985–3000. https://doi.org/10.1002/bse.3281.

Manisalidis, I., Stavropoulou, E., Stavropoulos, A., & Bezirtzoglou, E. (2020). Environmental and Health Impacts of Air Pollution: A Review. In Frontiers in Public Health (Vol. 8). Frontiers Media S.A. https://doi.org/10.3389/fpubh.2020.00014

Mansour, M., Abu-Allan, A. J., Alshdaifat, S. M., E’leimat, D. A., & Saleh, M. W. A. (2025). Board Effectiveness And Carbon Emission Disclosure: Evidence From ASEAN Countries. Discover Sustainability, 6(1). https://doi.org/10.1007/s43621-025-01405-4.

Masud, M. A. K., Rahman, M., & Ozturk, I. (2025). Organizational Strategic Responses to Climate Challenges in Global Carbon Management. Corporate Social Responsibility and Environmental Management, 32(5), 6766–6785. https://doi.org/10.1002/csr.70058.

Moriarty, B. T. (2024). Stakeholder Theory. In Elgar Encyclopedia of Corporate Communication (pp. 11–16). https://doi.org/10.4337/9781802200874.ch02

Moussa, T., Allam, A., Elbanna, S., & Bani-Mustafa, A. (2019). Can Board Environmental Orientation Improve U.S. Firms’ Carbon Performance? The Mediating Role Of Carbon Strategy. Business Strategy and the Environment, 29(1), 72–86. https://doi.org/10.1002/bse.2351.

Mukhtaruddin, M., Adam, M., Isnurhadi, I., & Fuadah, L. L. (2020). Implementation Of Social Culture In Corporate Governance: A Literature Study. International Journal of Financial Research, 11(1), 1–14. https://doi.org/10.5430/ijfr.v11n1p293.

Muktadir-Al-Mukit, D., & Bhaiyat, F. H. (2024). Impact Of Corporate Governance Diversity On Carbon Emission Under Environmental Policy Via The Mandatory Nonfinancial Reporting Regulation. Business Strategy and the Environment, 33(2), 1397–1417. https://doi.org/10.1002/bse.3555.

Musa, A. M. H., Alqubaysi, R., & Alqahtani, H. A. (2025). The Effect of Board Characteristics on ESG Commitment in Saudi Arabia: How Diversity, Independence, Size, and Expertise Shape Corporate Sustainability Practices. Sustainability (Switzerland), 17(12). https://doi.org/10.3390/su17125552.

Mutebi, H., Aryatwijuka, W., Rukundo, A., Twongyirwe, R., Tumwebembeire, N., & Tugiramasiko, M. (2025). Stakeholder Expectations, Inter-Organizational Coordination And Procurement Practices Among Humanitarian Organizations. Journal of Business and Socio-Economic Development, 5(3), 259–276. https://doi.org/10.1108/JBSED-12-2022-0129.

Narsa Goud, N. (2022). Corporate Governance: Does It Matter Management Of Carbon Emission Performance? An Empirical Analyses Of Indian Companies. Journal of Cleaner Production, 379. https://doi.org/10.1016/j.jclepro.2022.134485.

Nasih, M., Prasetyo, K., Ramadhan, E. A., Roiston, T. A., & Ayuningtyas, E. S. (2020). The Effect Of Board Effectiveness And Independence On The Narration Of Greenhouse Gases (Ghg) Emissions Disclosure. Journal of Security and Sustainability Issues, 9(3), 1025–1037. https://doi.org/10.9770/jssi.2020.9.3(26).

Oyewo, B. (2023). Corporate Governance And Carbon Emissions Performance: International Evidence On Curvilinear Relationships. Journal of Environmental Management, 334. https://doi.org/10.1016/j.jenvman.2023.117474.

Qian, Y., & Liu, Y. (2024). Improve Carbon Emission Efficiency: What Role Does The ESG Initiatives Play? Journal of Environmental Management, 367. https://doi.org/10.1016/j.jenvman.2024.122016.

Rahayu, I., & Sanjaya, M. I. N. (2024). ESG Performance and Firm Value: An Empirical Study in Indonesia. Review of Integrative Business and Economics Research, 13(4), 513–526. https://www.scopus.com/inward/record.uri?eid=2-s2.0-85212985272&partnerID=40&md5=c03f94536bbf9882bbd440a357b2cc52.

Rana, T., Rahman, M. J., & Öhman, P. (2025). Management Control, Performance Measurement, and Climate Risk Management Perspectives for Carbon Accounting. In Carbon Accounting for Sustainability and Environmental Management: Case Studies from China (pp. 328–355). https://doi.org/10.4324/9781003488965-22.

Redor, E., & Blomkvist, M. (2021). Do All Inside And Affiliated Directors Hold The Same Value For Shareholders? Economics Bulletin, 41(3), 882–895. https://www.scopus.com/inward/record.uri?eid=2-s2.0-85118612755&partnerID=40&md5=28b64385fd6b94dd7899653852d9d559.

Saini, M., Aggarwal, V., Dhingra, B., Kumar, P., & Yadav, M. (2023). ESG And Financial Variables: A Systematic Review. International Journal of Law and Management, 65(6), 663–682. https://doi.org/10.1108/IJLMA-02-2023-0033.

Saraswati, E., Puspita, N. R., & Sagitaputri, A. (2021). Do Firm And Board Characteristics Affect Carbon Emission Disclosures? International Journal of Energy Economics and Policy, 11(3), 14–19. https://doi.org/10.32479/ijeep.10792.

Shang, K. (2025). Balancing Corporate Social Responsibility, Environmental Policies, and Stakeholder Expectations for Sustainable Development: A Stakeholder-Centric Analysis. Sustainable Development. https://doi.org/10.1002/sd.70204.

Shu, P.-G., Chiang, S.-J., & Wu, T.-Y. (2024). Board Network And ESG Performance: Evidence From China. Corporate Social Responsibility and Environmental Management, 31(6), 5709–5729. https://doi.org/10.1002/csr.2887.

Statista. (2025a). Annual carbon dioxide (CO2) emissions worldwide from 1940 to 2024. Statista.

Statista. (2025b). Territorial carbon dioxide (CO2) emissions in Southeast Asia from 1960 to 2022, by country. Statista.

Sun, Z., Cai, C., Tan, H., Ji, H., & Tian, G. (Li). (2025). Corporate ESG Performance And Competitive Strategies From The Perspective Of Financial Markets: Strategic Significance Of Firm Size. Finance Research Letters, 77, 107080. https://doi.org/https://doi.org/10.1016/j.frl.2025.107080.

Treepongkaruna, S., Au Yong, H. H., Thomsen, S., & Kyaw, K. (2024a). Greenwashing, Carbon Emission, And ESG. Business Strategy and the Environment. https://doi.org/10.1002/bse.3929.

Treepongkaruna, S., & Suttipun, M. (2024b). The Impact Of Environmental, Social And Governance (ESG) Reporting On Corporate Profitability: Evidence From Thailand. Journal of Financial Reporting and Accounting. https://doi.org/10.1108/JFRA-09-2023-0555.

Tunçel, M. B., Doğan Başar, B., Gürsoy, S., & Ekşi, İ. H. (2025). ESG And Carbon Emissions In Energy Giants: Does A Green Stance Reflect In Market Value? Macroeconomics and Finance in Emerging Market Economies. https://doi.org/10.1080/17520843.2025.2474837.

Xie, H., Qin, Z., & Li, J. (2024). ESG Performance And Corporate Carbon Emission Intensity: Based On Panel Data Analysis Of A-Share Listed Companies. Frontiers in Environmental Science, 12. https://doi.org/10.3389/fenvs.2024.1483237.

Yang, W., & Hei, Y. (2024). Research on the Impact of Enterprise ESG Ratings on Carbon Emissions from a Spatial Perspective. Sustainability (Switzerland), 16(9). https://doi.org/10.3390/su16093826.

Zaid, M. A. A., Abuhijleh, S. T. F., & Pucheta-Martínez, M. C. (2020). Ownership Structure, Stakeholder Engagement, And Corporate Social Responsibility Policies: The Moderating Effect Of Board Independence. Corporate Social Responsibility and Environmental Management, 27(3), 1344–1360. https://doi.org/10.1002/csr.1888.

Zhou, Z., Liu, J., Zeng, H., Xu, M., & Li, S. (2022). Carbon Performance Evaluation Model From The Perspective Of Circular Economy—The Case Of Chinese Thermal Power Enterprise. Frontiers of Engineering Management, 9(2), 297–311. https://doi.org/10.1007/s42524-020-0143-z.