Green Innovation as a Moderating: The Effects of ESG Disclosure and Financial Slack on Financial Performance

Yohana Elliza Sitohang; Dwiarso Utomo

Authors

Yohana Elliza Sitohang Faculty of Economics and Business, Universitas Dian Nuswantoro, Indonesia
Dwiarso Utomo Faculty of Economics and Business, Universitas Dian Nuswantoro, Indonesia

Keywords:

Financial Slack, Green Innovation, Sustainability, Financial Performance, ESG Disclosure

Abstract

The dynamics towards sustainable energy encourage energy companies in Indonesia to integrate sustainability practices through ESG disclosure, financial slack as financial flexibility, and the implementation of green innovation. This study analyzes the effect of ESG disclosure and financial slack on the financial performance of energy sector companies and the role of green innovation as a moderating variable. The research data covers 16 energy sector companies listed on the Indonesia Stock Exchange (IDX) during the 2020–2024 period, with 64 observations selected using purposive sampling and analyzed using Moderated Regression Analysis in SPSS. The analysis results indicate that ESG disclosure has not shown a significant relationship with financial performance, financial slack tends to be associated with decreased performance, while green innovation makes a positive contribution and strengthens the influence of financial slack, but does not moderate the relationship between ESG disclosure and financial performance.

References

Adelia, F. (2024). The influence of carbon emission disclosure on financial performance: Do firm characteristics matter? Jurnal Akuntansi Dan Auditing Indonesia, 28(2), 2024. https://Doi.Org/10.20885/Jaai.Vol28.I

Aryati, T., & Susilawati, S. (2025). Exploring The Influence Of Esg And Prosperity Disclosure Score On Financial Performance. Economics - Innovative and Economics Research Journal, 13(1), 467–486. https://doi.org/10.2478/eoik-2025-0017

Astari, N. P. A. A. M., Purnamawati, I. G. A., & Werastuti, D. N. S. (2025). Green Innovation Sebagai Pemoderasi: Determinan Pengungkapan Environmental, Social, Governance. Owner, 9(3), 1633–1655. https://doi.org/10.33395/owner.v9i3.2748

Aulia, A., Febriyanti, F., & Umi, L. P. (2023). Trend Analysis Of ESG Disclosure On Green Finance Performance In Indonesia, Malaysia & Singapore Exchanges. JAK (Jurnal Akuntansi) Kajian Ilmiah Akuntansi, 10(1), 79–98. https://doi.org/10.30656/jak.v10i1.5439

Bibi, Y. S., & Narsa, N. P. D. R. H. (2022). Bibi dan Narsa., Pengaruh Enviromental Management Terhadap Kinerja Keuangan. In Jurnal Akuntansi Universitas Jember (Vol. 20, Number 2). https://doi.org/10.19184/jauj.v20i2.34896

Chen, X., Lakkanawanit, P., Suttipun, M., Swatdikun, T., & Huang, S. Z. (2024). Green Technology Innovation and Corporate Reputation: Key Drivers of ESG and Firm Performance. Emerging Science Journal, 8(6), 2501–2518. https://doi.org/10.28991/ESJ-2024-08-06-021

de Roo, M., Wickert, C., van der Laan, G., Elfring, T., & Zapkau, F. B. (2025). Examining the financial slack–corporate social performance relationship across countries: The influence of formal institutions. Journal of International Management. https://doi.org/10.1016/j.intman.2025.101278

Desyetti, Lukman, S., Rahim, R., & Adrianto, F. (2025). Does ESG Disclosure Affect Profitability? Evidence from Shariah-Compliant Firms in Indonesia and Malaysia. Jurnal Manajemen Universitas Bung Hatta, 20(2). https://doi.org/10.37301/jmubh.v20i2.28076

Ghozali, I. (2021). Aplikasi analisis multivariate dengan program IBM SPSS 26.

Guo, F., Zou, B., Zhang, X., Bo, Q., & Li, K. (2020). Financial slack and firm performance of SMMEs in China: Moderating effects of government subsidies and market-supporting institutions. International Journal of Production Economics, 223. https://doi.org/10.1016/j.ijpe.2019.107530

Hailu, D. H. H., Wang, M., Ibrahim, A. A., & Ayalew, M. M. (2020). Financial Slack and Firm Performance: Evidence from Africa. https://journalofbusiness.org/index.php/GJMBR/article/view/3232

Inawati, W. A., & Rahmawati, R. (2023). Dampak Environmental, Social, Dan Governance (ESG) Terhadap Kinerja Keuangan. Jurnal Akademi Akuntansi, 6(2), 225–241. https://doi.org/10.22219/jaa.v6i2.26674

Jaunanda, M., & Putri, C. N. (2025). Financial Slack And Environmental Performance On Carbon Disclosure In Indonesia And Malaysia Mining Companies. EKUITAS (Jurnal Ekonomi Dan Keuangan), 9(1), 125–138. https://doi.org/10.24034/j25485024.y2025.v9.i1.6938

Kementerian ESDM. (2024). Menuju NZE 2060, Kementerian ESDM Gelar FGD Pengembangan CCS/CCUS. https://esdm.go.id/en/media-center/news-archives/menuju-nze-2060-kementerian-esdm-gelar-fgd-pengembangan-ccs-ccus

Khanchel, I., Lassoued, N., & Baccar, I. (2023). Sustainability and firm performance: the role of environmental, social and governance disclosure and green innovation. Management Decision, 61(9), 2720–2739. https://doi.org/10.1108/MD-09-2021-1252

Liang, J., Yang, S., Xia, Y., & Mason, R. A. (2023). The Role of Financial Slack on the Relationship Between Demand Uncertainty and Operational Efficiency. https://ssrn.com/abstract=4381129

Liu, M., Liu, L., & Feng, A. (2024). The Impact of Green Innovation on Corporate Performance: An Analysis Based on Substantive and Strategic Green Innovations. Sustainability (Switzerland) , 16(6). https://doi.org/10.3390/su16062588

Maghfuriyah, A., Hertin, R. D., Wijaya, H., Anjara, F., Nugroho, F., Listiana, N., & Istiqomah, N. A. (2024). Green Technology Innovation and Its Impact on Financial Performance with the Moderation of Green Image and Green Subsidies in SMEs in Depok City. Journal of Environmental Economics and Sustainability, 1(4), 7. https://doi.org/10.47134/jees.v1i4.449

Makhdalena, M., Zulvina, D., Zulvina, Y., Amelia, R. W., & Wicaksono, A. P. (2023). ESG and Firm Performance in Developing Countries: Evidence From ASEAN. ETIKONOMI, 22(1), 65–78. https://doi.org/10.15408/etk.v22i1.25271

Mardiana, & Hanani, T. (2025). The Effect Of Environmental, Social, And Governance (Esg) Performance On Corporate Financial Performance In Indonesia: Based On The Perspective Of Innovation Mardiana. In Indonesian Interdisciplinary Journal of Sharia Economics (IIJSE (Vol. 8, Number 1). https://doi.org/10.31538/iijse.v8i1.6215

Meylani, & Martdian Ratna Sari. (2025). Exploring the Impact of ESG Practices on Financial Performance: The Moderating Effect of Green Innovation in the Indonesian Energy Sector. Jurnal Riset Akuntansi Dan Bisnis Airlangga, 9(2), 196–209. https://doi.org/10.20473/jraba.v9i2.62096

Mushi, H. M. (2025). Moderating role of green innovation between sustainability strategies and firm performance in Tanzania. Cogent Business and Management, 12(1). https://doi.org/10.1080/23311975.2024.2440624

Naeem, N., & Çankaya, S. (2022). The Impact of ESG Performance over Financial Performance: A Study on Global Energy and Power Generation Companies.

Nazwir, P. W., & Raharja, S. (2024). Pengaruh Corporate Social Responsibility dan Financial Slack terhadap Kinerja Keuangan Perusahaan. Jurnal Maksipreneur: Manajemen, Koperasi, Dan Entrepreneurship, 13(2), 670–683. https://doi.org/10.30588/jmp.v13i2.1546

Oke, L. H., Dewi, T. N., & Prima, Y. S. P. (2025). The Effect of Financial Slack on Firm Performance with Lender’s Monitoring as a Moderating Variable. https://doi.org/10.38035/dijefa.v6i5

Pramitya Khairunnisa, D., & Erna Widiastuty. (2023). Pengaruh Kinerja Esg Terhadap Kinerja Keuangan Perusahaan. Jurnal Riset Akuntansi Aksioma, 22(2), 16–27. https://doi.org/10.29303/aksioma.v22i2.218

Prihandini, W. (2024). Analysis Of The Effects Of Environmental Disclosure, Social Disclosure, And Governance Disclosure On Financial Performance In Companies Listed In The Esg Sector Leader Index Of The Indonesia Stock Exchange In 2023. In International Journal of Economics,Businessand Accounting Research (IJEBAR) Peer Reviewed-International Journal (Vol. 8). https://jurnal.stie-aas.ac.id/index.php/IJEBAR

Putri, M., Amalia, N., & Safitri, H. (2025). The Influence of ESG Disclosure, Green Investment, and Green Fund on Company Value in the Energy Sector Listed on the Indonesia Stock Exchange. https://doi.org/10.47631/jareas.v6i3.949

Rahmadini, S., & Hartanti, D. (2025). ESG, Financial Performance, and the Moderating Role of ESG Controversies. Jurnal Dinamika Akuntansi, 17(1), 34–49. https://doi.org/10.15294/jda.v17i1.17301

Ramadana, M., Julia, J., & Wati, E. (2025). Green Practices On Sustainability Performance: The Moderating Role Of Slack Resources. Jurnal Akuntansi Dan Keuangan Indonesia, 22(1). https://doi.org/10.7454/jaki.v22i1.1973

Ren, M., Zhou, J., Si, J., Wang, G., & Guo, C. (2024). The Impact of ESG Performance on Green Innovation among Traditional Energy Enterprises—Evidence from Listed Companies in China. Sustainability (Switzerland) , 16(9). https://doi.org/10.3390/su16093542

Risal, R., Mustaruddin, M., & Afifah, N. (2024). ESG disclosure and company profitability: Does company size play a role? Journal of Enterprise and Development (JED), 6(2). https://doi.org/10.20414/jed.v6i2.10072

Ruan, R., Chen, W., & Zhu, Z. (2022). Linking Environmental Corporate Social Responsibility with Green Innovation Performance: The Mediating Role of Shared Vision Capability and the Moderating Role of Resource Slack. Sustainability (Switzerland), 14(24). https://doi.org/10.3390/su142416943

Saputra, F. G., Yulianti, R., & Hastuti, S. (2025). The Availability of Financial Resources Measured with Financial Slack for Exposing Carbon Emissions (Vol. 3). https://journal.uii.ac.id/inCAF/article/view/38428

Seviana, M. F., & Sumarta, N. H. (2025). Pengaruh Green Accounting Dan Green Innovation Terhadap. Indonesian Journal of Economics, 2(6). https://jurnal.intekom.id/index.php/ijema/article/view/1356

Silviani, A. A., Kamaliah, K., & Wiguna, M. (2024). Pengaruh ESG Disclosure Terhadap Kinerja Keuangan Perusahaan: Sustainability Committee Sebagai Pemoderasi. AKTSAR: Jurnal Akuntansi Syariah, 7(2), 227. https://doi.org/10.21043/aktsar.v7i2.29027

Sukma Subagio, I., & Indira Subagio, D. (2025). Educational Studies and Research Journal Profitabilitas Berkelanjutan: ESG Disclosure dan Pengaruhnya terhadap Kinerja Perusahaan. https://doi.org/10.60036/5gd33350

Sumayyah, S., Damayanti, R. W., & Zahara, I. (2025). Green innovation, green accounting, and performance: The moderating role of green intellectual capital. Journal of Accounting and Investment, 26(1), 270–297. https://doi.org/10.18196/jai.v26i1.24362

Tariq, A., Ehsan, S., Badir, Y. F., Memon, M. A., & Khan Sumbal, M. S. U. (2023). Does green process innovation affect a firm’s financial risk? The moderating role of slack resources and competitive intensity. European Journal of Innovation Management, 26(4), 1168–1185. https://doi.org/10.1108/EJIM-05-2021-0265

Tuti, Y. W., Haryati, T., Wahyu, N., & Kirana, I. (2025). The Effect Of Esg, Human Capital, And Green Innovation Disclosure On Financial Performance. In Indonesian Interdisciplinary Journal of Sharia Economics (IIJSE) (Vol. 8, Number 2). https://doi.org/10.31538/iijse.v8i2.6310

Vitale, G., Cupertino, S., & Taticchi, P. (2023). Analysing the role of available organisational slack resources in affecting environmental performance. A structural equation modelling approach. Measuring Business Excellence, 27(3), 341–363. https://doi.org/10.1108/MBE-09-2022-0110

Wang, Y. Z., & Ahmad, S. (2024). Green process innovation, green product innovation, leverage, and corporate financial performance; evidence from system GMM. Heliyon, 10(4). https://doi.org/10.1016/j.heliyon.2024.e25819

Wardani, I. A., Juanda, A., & Wicaksono, A. P. N. (2025). Structural ownership and ESG disclosure: Unveiling their impact on corporate financial performance. Journal of Accounting and Investment, 26(1), 314–334. https://doi.org/10.18196/jai.v26i1.24193

Wedari, L. K., & Alfian, H. (2024). Does Green Innovation Impact on Profitability of Indonesian Consumer Non-Cyclicals Companies? International Journal of Sustainable Development and Planning, 19(7), 2805–2812. https://doi.org/10.18280/ijsdp.190738

Welly, W., & Hermanto, H. (2025). The Effect Of Capital Structure, Firm Age, Firm Size, Asset Structure, Liquidity, Financial Slack, Asset Productivity, And Operating Profit Margin On Profitability. https://doi.org/10.38142/jtep.v5i3.1454

Widoretno, E. P., Choirunnisa, A., & Nur Fajri, M. A. (2025). How Esg Performance Influences Financial Performance In Europe: Unpacking The Mediation Effect Of Green Innovation. Jurnal Akuntansi Dan Keuangan Indonesia, 22(2). https://doi.org/10.7454/jaki.v22i2.2031

Widyantoro, T., Rusmanto, T., Warganegara, D. L., & Furinto, A. (2025). Enhancing green innovation and financial performance: the role of stakeholder pressures and green dynamic capabilities. Frontiers in Climate, 7. https://doi.org/10.3389/fclim.2025.1599894

Xiao, J., Zhang, X., Yan, H., & Zeng, P. (2025). ESG performance and green cooperative innovation: a signaling theory framework. Asia Pacific Journal of Marketing and Logistics. https://doi.org/10.1108/APJML-04-2025-0612

Xu, C., & He, Y. (2025). The Impact of ESG Performance on Green Technology Innovation: A Moderating Effect Based on Digital Transformation. Sustainability (Switzerland), 17(7). https://doi.org/10.3390/su17073170

Xu, L., Lu, X., Zhang, Z., & Shu, H. (2025). Green innovation, financialization, and ESG performance. International Review of Economics and Finance, 102. https://doi.org/10.1016/j.iref.2025.104404

Yu, H. K., Kim, M., & Kim, T. (2025). Buffer or Enabler? The Effect of Financial Slack on R&D Investment in Different Environments. Systems, 13(3). https://doi.org/10.3390/systems13030181

Zhou, J. (2023). Dual Innovation, Financial Slack and Business Performance—Experiential Data from Private Enterprises. Journal of World Economy, 2(1), 36–44. https://doi.org/10.56397/jwe.2023.03.04