THE INFLUENCE OF ESG AND GCG PRACTICES ON FINANCIAL PERFORMANCE OF COMPANIES IN INDONESIA: A SYSTEMATIC LITERATURE REVIEW

Abstract

In the era of innovative management practices and digital transformation, the integration of Environmental, Social, and Governance (ESG) practices with Good Corporate Governance (GCG) is crucial for enhancing financial performance in emerging markets like Indonesia. This systematic literature review (SLR) examines the influence of ESG disclosure, scores, and risk factors, alongside GCG mechanisms such as board independence and institutional ownership, on key financial metrics like Return on Assets (ROA), Return on Equity (ROE), and profitability in companies listed on the Indonesia Stock Exchange (BEI). Using PRISMA 2020 guidelines, searches were conducted via Harzing's Publish or Perish on Google Scholar, yielding 300 records from 2015-2025, with 12 empirical studies selected (10 local and 2 global benchmarks from Scopus). Findings indicate a predominantly positive relationship (80% of studies), where ESG practices boost ROA by 5-12% and GCG moderates effects in the banking sector, though gaps exist in digital integration and syariah compliance. This review provides implications for sustainable strategies, recommending AI-driven ESG-GCG frameworks to align with ICOMBEC themes and guide policymakers.