Does Environmental, Social, and Governance (ESG) Disclosure Matter for Creditor? Empirical Evidence from Indonesia

This research aims to examine the impact of environmental, social, and governance (ESG) disclosure on cost of debt in non-financial companies listed on the Indonesia Stock Exchange across ten different industries. This study utilizes a sample comprising 288 non-financial companies from ten different industries listed on the Indonesia Stock Exchange for the period from 2017 to 2022, all of which have published sustainability reports (SR), resulting in 742 observations. Regression analysis using Ordinary Least Squares (OLS) is employed to examine the impact of companies' ESG disclosures on costs of debt. The robustness of these findings is assessed and confirmed through four distinct analytical models, namely OLS Standard Error, SSC Model, Fixed Effect Model, and Random Effect Model. The research outcomes indicate that increased environmental, social, and governance (ESG) disclosure is associated with a reduction in the cost of debt. These findings exhibit robustness across diverse industries and remain consistent when employing various statistical methodologies.