Environmental, social, and governance performance and corporate bond ratings: empirical evidence from Indonesia
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Published:
Jun 29, 2026
Keywords:
Binary Logistic Regression, Corporate Bond Ratings, Credit Risk, Environmental, Social, and Governance (ESG), Sustainability Performance
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Articles
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Abstract
This study examined the influence of Environmental, Social, and Governance (ESG) performance on corporate bond ratings among companies listed on the Indonesia Stock Exchange during the 2020–2024 period. A quantitative approach was employed using secondary data obtained from Refinitiv, PT Pemeringkat Efek Indonesia (PEFINDO), annual reports, and sustainability reports. The sample consisted of 23 companies with 106 firm-year observations selected through purposive sampling. Binary logistic regression was used to test the proposed relationships. The results showed that Total ESG Score and Environmental performance did not significantly affect corporate bond ratings. In contrast, Social performance had a positive and significant effect, while Governance performance exhibited a significant negative effect. Furthermore, the Environmental, Social, and Governance dimensions jointly influenced corporate bond ratings. These findings indicate that ESG dimensions contribute differently to credit assessments and that evaluating individual ESG dimensions provides more meaningful information than relying solely on an aggregate ESG score in explaining corporate bond ratings in Indonesia
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How to Cite
Rahayuningtyas, W., & Khairunnisa, K. (2026). Environmental, social, and governance performance and corporate bond ratings: empirical evidence from Indonesia. Indonesia Auditing Research Journal, 15(2), 277–288. https://doi.org/10.35335/arj.v15i2.710
References
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Amaral, M. R. do A., Willerding, I. V. A., & Lapolli, É. M. (2023). ESG and sustainability: the impact of the pillar social. Concilium, 23(13), 186–199. https://doi.org/10.53660/CLM-1643-23J43
Anaz, A. F., & Awad, A. B. (2025). ESG and corporate creditworthiness: an ordinal-logistic exploration of global markets. Journal of Financial Reporting and Accounting. https://doi.org/10.1108/JFRA-02-2025-0137
Andariyani, I. M., Wardi, Y., & Evanita, S. (2026). Dynamics of environmental communication research in sustainable development: Systematic literature review and bibliometric analysis VOSviewer. Indonesia Auditing Research Journal, 15(2), 165–172.
Apergis, N., Poufinas, T., & Antonopoulos, A. (2022). ESG scores and cost of debt. Energy Economics, 112, 106186. https://doi.org/10.1016/j.eneco.2022.106186
Aslan, A., Poppe, L., & Posch, P. (2021). Are Sustainable Companies More Likely to Default? Evidence from the Dynamics between Credit and ESG Ratings. Sustainability, 13(15), 8568. https://doi.org/10.3390/su13158568
Bao, X., Sadiq, M., Tye, W., & Zhang, J. (2024). The impact of environmental, social, and governance (ESG) rating disparities on corporate risk: The mediating role of financing constraints. Journal of Environmental Management, 371, 123113. https://doi.org/10.1016/j.jenvman.2024.123113
Becchetti, L., Bobbio, E., Prizia, F., & Semplici, L. (2022). Going Deeper into the S of ESG: A Relational Approach to the Definition of Social Responsibility. Sustainability, 14(15), 9668. https://doi.org/10.3390/su14159668
Boubaker, S., Liu, Z., Mu, Y., & Zhan, Y. (2025). Carbon dioxide emissions and environmental risks: Long term and short term. Risk Analysis, 45(3), 523–543. https://doi.org/10.1111/risa.14281
Bruno, C. C., & Henisz, W. J. (2024). Environmental, Social, and Governance (ESG) Outcomes and Municipal Credit Risk. Business & Society, 63(8), 1709–1756. https://doi.org/10.1177/00076503231220541
Cahyaningsih, C., & Ihromi, F. U. (2024). Environmental Accounting Disclosure, Green Process Innovation, and Environmental Management Accounting Improving Economic Performance. AFRE (Accounting and Financial Review), 7(1), 107–116. https://doi.org/10.26905/afr.v7i1.10840
Chodnicka-Jaworska, P. (2021). ESG as a Measure of Credit Ratings. Risks, 9(12), 226. https://doi.org/10.3390/risks9120226
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Dahivale, R. P. (2022). ESG: A New Horizon. The Management Accountant Journal, 58–60. https://doi.org/10.33516/maj.v57i3.58-60p
Fermo, C. Da, Guardabascio, B., & Stanghellini, E. (2025). The Influence of Sustainability on Credit Assessment for the Banking Sector: A Mediation Analysis. Corporate Social Responsibility and Environmental Management, 32(5), 6139–6158. https://doi.org/10.1002/csr.3266
Fuadah, L. L., Mukhtaruddin, M., Andriana, I., & Arisman, A. (2022). The Ownership Structure, and the Environmental, Social, and Governance (ESG) Disclosure, Firm Value and Firm Performance: The Audit Committee as Moderating Variable. Economies, 10(12), 314. https://doi.org/10.3390/economies10120314
Ghozali, I. (2021). Aplikasi Analisis Multivariate dengan Program IBM SPSS 26.
Harymawan, I., Putra, F. K. G., Fianto, B. A., & Wan Ismail, W. A. (2021). Financially Distressed Firms: Environmental, Social, and Governance Reporting in Indonesia. Sustainability, 13(18), 10156. https://doi.org/10.3390/su131810156
Hendrastuti, R., & Harahap, R. F. (2023). Agency theory: Review of the theory and current research. Jurnal Akuntansi Aktual, 10(1), 85. https://doi.org/10.17977/um004v10i12023p085
Isnurhadi, Sulastri, Saftiana, Y., & Jie, F. (2022). Banking Industry Sustainable Growth Rate under Risk: Empirical Study of the Banking Industry in ASEAN Countries. Sustainability, 15(1), 564. https://doi.org/10.3390/su15010564
Jang, G.-Y., Kang, H.-G., Lee, J.-Y., & Bae, K. (2020). ESG Scores and the Credit Market. Sustainability, 12(8), 3456. https://doi.org/10.3390/su12083456
Jeon, J. Q. (2021). ESG Factors as a Determinant on Credit Ratings. Asian Review of Financial Research, 34(2), 31–65. https://doi.org/10.37197/ARFR.2021.34.2.2
Kanno, M. (2023). Does ESG performance improve firm creditworthiness? Finance Research Letters, 55, 103894. https://doi.org/10.1016/j.frl.2023.103894
Kong, X., Li, Z., & Lei, X. (2024). Research on the impact of ESG performance on carbon emissions from the perspective of green credit. Scientific Reports, 14(1), 10478. https://doi.org/10.1038/s41598-024-61353-3
Kontan.co.id. (2023). Pefindo turunkan rating obligasi Wijaya Karya (WIKA) jadi idD, ini respons manajemen .
Kurbonov, S., Nasriddinov, B., & Mulbah, K. T. (2024). The Impact of Credit Rating Adjustments on Bond Spreads: Evidence from China. European Scientific Journal, ESJ, 20(10), 1. https://doi.org/10.19044/esj.2024.v20n10p1
Lee, J., Lee, K., & Oh, F. D. (2024). Credit ratings and corporate ESG behavior. The Quarterly Review of Economics and Finance, 98, 101938. https://doi.org/10.1016/j.qref.2024.101938
Li, Wu, M., Chen, X., & Huang, W. (2022). Environmental, social and governance performance, corporate transparency, and credit rating: Some evidence from Chinese A-share listed companies. Pacific-Basin Finance Journal, 74, 101806. https://doi.org/10.1016/j.pacfin.2022.101806
Michalski, L., & Low, R. K. Y. (2021). Corporate credit rating feature importance: Does ESG matter? SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3788037
Natalia, G. N. (2022). The influence of the implementation of corporate social responsibility (csr) on the financial performance of Indonesian banks. Indonesian Accounting Research Journal, 11(1), 9–12.
Nurbaiti, A., Fahlevi, A. R., & Arifanka, M. R. (2024). The relationship between ESG and corruption on potential risks: An analysis of Asian bank from 2017 to 2022. Global Business & Finance Review (GBFR), 29(7), 140–152. https://doi.org/10.17549/gbfr.2024.29.7.140
Pérez-Cornejo, C., & de Quevedo-Puente, E. (2023). How corporate social responsibility mediates the relationship between corporate reputation and enterprise risk management: evidence from Spain. Eurasian Business Review, 13(2), 363–383. https://doi.org/10.1007/s40821-022-00223-2
Permatasari, N. K., Dasmaran, V., & Tatang. (2025). The impact of intellectual capital and company risk on stock returns with size as a moderator. Indonesia Auditing Research Journal, 12(3), 125–134.
Rahman, L. (2021). The effect of implementing corporate governance studies on manufacturing companies listed on the IDX in the 2008 period on disclosure of social responsibility. Indonesia Auditing Research Journal, 10(4), 160–167.
Saraswati1, R. S., Wardoyo1, D. U., & Wulandari1, G. Y. (2024). Uncovering the Nexus Between Corporate Governance and Environmental, Social, and Governance (ESG) Score of Indonesia-Listed Companies Assessed by Sustainalytics. Proceedings of the International Conference on Sustainable Collaboration in Business, Technology, Information, and Innovation (SCBTII 2024), 303, 370.
Wulandari, L. A., Paulus, H., Melzatia, S., Oktris, L., & Akbar, T. (2026). Maqashid sharia and corporate sustainability under financial vulnerability. Indonesia Auditing Research Journal, 15(1), 75–84.
Yohana, I. (2022). The influence of corporate governance on the performance of public companies included in the CGPI rating for the 2005-2007 period. Indonesia Auditing Research Journal, 11(4), 191–202.
Zanin, L. (2022). Estimating the effects of ESG scores on corporate credit ratings using multivariate ordinal logit regression. Empirical Economics, 62(6), 3087–3118. https://doi.org/10.1007/s00181-021-02121-4
Alves, C. F., & Meneses, L. L. (2024). ESG scores and debt costs: Exploring indebtedness, agency costs, and financial system impact. International Review of Financial Analysis, 94, 103240. https://doi.org/10.1016/j.irfa.2024.103240
Amaral, M. R. do A., Willerding, I. V. A., & Lapolli, É. M. (2023). ESG and sustainability: the impact of the pillar social. Concilium, 23(13), 186–199. https://doi.org/10.53660/CLM-1643-23J43
Anaz, A. F., & Awad, A. B. (2025). ESG and corporate creditworthiness: an ordinal-logistic exploration of global markets. Journal of Financial Reporting and Accounting. https://doi.org/10.1108/JFRA-02-2025-0137
Andariyani, I. M., Wardi, Y., & Evanita, S. (2026). Dynamics of environmental communication research in sustainable development: Systematic literature review and bibliometric analysis VOSviewer. Indonesia Auditing Research Journal, 15(2), 165–172.
Apergis, N., Poufinas, T., & Antonopoulos, A. (2022). ESG scores and cost of debt. Energy Economics, 112, 106186. https://doi.org/10.1016/j.eneco.2022.106186
Aslan, A., Poppe, L., & Posch, P. (2021). Are Sustainable Companies More Likely to Default? Evidence from the Dynamics between Credit and ESG Ratings. Sustainability, 13(15), 8568. https://doi.org/10.3390/su13158568
Bao, X., Sadiq, M., Tye, W., & Zhang, J. (2024). The impact of environmental, social, and governance (ESG) rating disparities on corporate risk: The mediating role of financing constraints. Journal of Environmental Management, 371, 123113. https://doi.org/10.1016/j.jenvman.2024.123113
Becchetti, L., Bobbio, E., Prizia, F., & Semplici, L. (2022). Going Deeper into the S of ESG: A Relational Approach to the Definition of Social Responsibility. Sustainability, 14(15), 9668. https://doi.org/10.3390/su14159668
Boubaker, S., Liu, Z., Mu, Y., & Zhan, Y. (2025). Carbon dioxide emissions and environmental risks: Long term and short term. Risk Analysis, 45(3), 523–543. https://doi.org/10.1111/risa.14281
Bruno, C. C., & Henisz, W. J. (2024). Environmental, Social, and Governance (ESG) Outcomes and Municipal Credit Risk. Business & Society, 63(8), 1709–1756. https://doi.org/10.1177/00076503231220541
Cahyaningsih, C., & Ihromi, F. U. (2024). Environmental Accounting Disclosure, Green Process Innovation, and Environmental Management Accounting Improving Economic Performance. AFRE (Accounting and Financial Review), 7(1), 107–116. https://doi.org/10.26905/afr.v7i1.10840
Chodnicka-Jaworska, P. (2021). ESG as a Measure of Credit Ratings. Risks, 9(12), 226. https://doi.org/10.3390/risks9120226
Chodnicka-Jaworska, P. (2022). Environmental, Social, and Governance Impact on Energy Sector Default Risk—Long-Term Issuer Credit Ratings Perspective. Frontiers in Energy Research, 10. https://doi.org/10.3389/fenrg.2022.817679
Dahivale, R. P. (2022). ESG: A New Horizon. The Management Accountant Journal, 58–60. https://doi.org/10.33516/maj.v57i3.58-60p
Fermo, C. Da, Guardabascio, B., & Stanghellini, E. (2025). The Influence of Sustainability on Credit Assessment for the Banking Sector: A Mediation Analysis. Corporate Social Responsibility and Environmental Management, 32(5), 6139–6158. https://doi.org/10.1002/csr.3266
Fuadah, L. L., Mukhtaruddin, M., Andriana, I., & Arisman, A. (2022). The Ownership Structure, and the Environmental, Social, and Governance (ESG) Disclosure, Firm Value and Firm Performance: The Audit Committee as Moderating Variable. Economies, 10(12), 314. https://doi.org/10.3390/economies10120314
Ghozali, I. (2021). Aplikasi Analisis Multivariate dengan Program IBM SPSS 26.
Harymawan, I., Putra, F. K. G., Fianto, B. A., & Wan Ismail, W. A. (2021). Financially Distressed Firms: Environmental, Social, and Governance Reporting in Indonesia. Sustainability, 13(18), 10156. https://doi.org/10.3390/su131810156
Hendrastuti, R., & Harahap, R. F. (2023). Agency theory: Review of the theory and current research. Jurnal Akuntansi Aktual, 10(1), 85. https://doi.org/10.17977/um004v10i12023p085
Isnurhadi, Sulastri, Saftiana, Y., & Jie, F. (2022). Banking Industry Sustainable Growth Rate under Risk: Empirical Study of the Banking Industry in ASEAN Countries. Sustainability, 15(1), 564. https://doi.org/10.3390/su15010564
Jang, G.-Y., Kang, H.-G., Lee, J.-Y., & Bae, K. (2020). ESG Scores and the Credit Market. Sustainability, 12(8), 3456. https://doi.org/10.3390/su12083456
Jeon, J. Q. (2021). ESG Factors as a Determinant on Credit Ratings. Asian Review of Financial Research, 34(2), 31–65. https://doi.org/10.37197/ARFR.2021.34.2.2
Kanno, M. (2023). Does ESG performance improve firm creditworthiness? Finance Research Letters, 55, 103894. https://doi.org/10.1016/j.frl.2023.103894
Kong, X., Li, Z., & Lei, X. (2024). Research on the impact of ESG performance on carbon emissions from the perspective of green credit. Scientific Reports, 14(1), 10478. https://doi.org/10.1038/s41598-024-61353-3
Kontan.co.id. (2023). Pefindo turunkan rating obligasi Wijaya Karya (WIKA) jadi idD, ini respons manajemen .
Kurbonov, S., Nasriddinov, B., & Mulbah, K. T. (2024). The Impact of Credit Rating Adjustments on Bond Spreads: Evidence from China. European Scientific Journal, ESJ, 20(10), 1. https://doi.org/10.19044/esj.2024.v20n10p1
Lee, J., Lee, K., & Oh, F. D. (2024). Credit ratings and corporate ESG behavior. The Quarterly Review of Economics and Finance, 98, 101938. https://doi.org/10.1016/j.qref.2024.101938
Li, Wu, M., Chen, X., & Huang, W. (2022). Environmental, social and governance performance, corporate transparency, and credit rating: Some evidence from Chinese A-share listed companies. Pacific-Basin Finance Journal, 74, 101806. https://doi.org/10.1016/j.pacfin.2022.101806
Michalski, L., & Low, R. K. Y. (2021). Corporate credit rating feature importance: Does ESG matter? SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3788037
Natalia, G. N. (2022). The influence of the implementation of corporate social responsibility (csr) on the financial performance of Indonesian banks. Indonesian Accounting Research Journal, 11(1), 9–12.
Nurbaiti, A., Fahlevi, A. R., & Arifanka, M. R. (2024). The relationship between ESG and corruption on potential risks: An analysis of Asian bank from 2017 to 2022. Global Business & Finance Review (GBFR), 29(7), 140–152. https://doi.org/10.17549/gbfr.2024.29.7.140
Pérez-Cornejo, C., & de Quevedo-Puente, E. (2023). How corporate social responsibility mediates the relationship between corporate reputation and enterprise risk management: evidence from Spain. Eurasian Business Review, 13(2), 363–383. https://doi.org/10.1007/s40821-022-00223-2
Permatasari, N. K., Dasmaran, V., & Tatang. (2025). The impact of intellectual capital and company risk on stock returns with size as a moderator. Indonesia Auditing Research Journal, 12(3), 125–134.
Rahman, L. (2021). The effect of implementing corporate governance studies on manufacturing companies listed on the IDX in the 2008 period on disclosure of social responsibility. Indonesia Auditing Research Journal, 10(4), 160–167.
Saraswati1, R. S., Wardoyo1, D. U., & Wulandari1, G. Y. (2024). Uncovering the Nexus Between Corporate Governance and Environmental, Social, and Governance (ESG) Score of Indonesia-Listed Companies Assessed by Sustainalytics. Proceedings of the International Conference on Sustainable Collaboration in Business, Technology, Information, and Innovation (SCBTII 2024), 303, 370.
Wulandari, L. A., Paulus, H., Melzatia, S., Oktris, L., & Akbar, T. (2026). Maqashid sharia and corporate sustainability under financial vulnerability. Indonesia Auditing Research Journal, 15(1), 75–84.
Yohana, I. (2022). The influence of corporate governance on the performance of public companies included in the CGPI rating for the 2005-2007 period. Indonesia Auditing Research Journal, 11(4), 191–202.
Zanin, L. (2022). Estimating the effects of ESG scores on corporate credit ratings using multivariate ordinal logit regression. Empirical Economics, 62(6), 3087–3118. https://doi.org/10.1007/s00181-021-02121-4
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