The Effect of ESG-Based FAS Implementation on Financial Performance (ROA)

Abstract

This study aims to analyze the effect of ESG-based FAS implementation, company size, and leverage on company financial performance as measured by return on assets (ROA). The research sample consists of non-financial companies listed on the IDX in 2024 that have obtained ESG scores from the IAI.  The data was analyzed using multiple regression methods. The results show that all three variables have a significant effect on ROA. The implementation of ESG-based FAS improves transparency, accountability, and sustainable business practices, which have a positive impact on operational performance and profitability. Company size provides advantages through greater resources and asset optimization capabilities, while leverage, when managed properly, supports company expansion and productivity. These findings confirm that the combination of ESG principles, business scale growth strategies, and balanced funding structure management can increase asset effectiveness in generating profits. This study has implications for company management in formulating sustainability strategies and funding policies, as well as for regulators in supporting better ESG reporting practices.