The influence of CSR and environmental performance on profitability

Abstract

This research seeks to investigate how corporate social responsibility (CSR) and environmental performance impact the financial profitability of a company. The approach employed is a quantitative methodology utilizing cross-sectional regression analysis with a sample comprising 72 manufacturing companies listed on the Indonesia Stock Exchange (IDX). The study findings reveal that the impact of CSR ( b=0,11;p-value=0,07) on financial performance is inconclusive. This is due to companies being unable to validate that their social responsibility aligns with community expectations, indicating no clear effect of CSR and environmental performance on company profitability.. On the other hand, environmental performance( b=0,07;p-value=0,00) affects the profitability of the company. This condition can be achieved because within the framework of legitimacy theory, the public considers that industrial waste processing carried out by the companies that are the sample in this study has a good impact on the company’s environment, which in turn will increase competitive advantage and ultimately increase company profits.