The Impact of Environmental and Social Factors on Mining Firms' Financial Performance

Abstract

This research investigates how environmental performance, environmental costs, and social responsibility influence financial performance in mining corporations. Utilizing purposive sampling, eleven mining enterprises listed on the Indonesia Stock Exchange during 2020–2023 were examined through secondary data analysis. Environmental performance was assessed using PROPER ratings, environmental costs through cost-to-profit ratios, social responsibility via the CSRI index, and financial performance through Return on Assets (ROA). Multiple linear regression analysis reveals that environmental performance significantly impacts financial performance (sig. 0.003 < 0.05), whereas environmental costs and social responsibility demonstrate no significant individual effects (sig. 0.413 and 0.867, respectively). However, simultaneous testing confirms all three variables collectively influence financial performance significantly (F-value 4.748, sig. 0.008). The model explains 24.3% of financial performance variation. These findings provide valuable insights for sustainable business strategies in the extractive industry sector.