Do Enterprise Risks Management, Green Intellectual Capital and Business Ethics Improve Sustainable Finance At Financial Institutions In Indonesia?

Abstract

Purpose: This study aims to test and analyze the effect of Enterprise Risk Management (ERM), Green Intellectual Capital (GIC), and Business Ethics (BE) on Sustainable Finance (SF).   Theoretical reference: The theory of legitimacy was first expressed or presented by (Dowling & Pfeffer, 1975). Tracing back to its roots, the term "legitimacy" comes from the Latin word "legitimus", which translates to "according to law" (Danovan, O, 2000).   Method: This research uses a quantitative descriptive verification method. The data used in this study are secondary data in the form of financial reports, annual reports and sustainability reports on the idx website.  The population in this study are financial services companies listed on the IDX for the 2018-2021 period. The model in this study uses multiple regression, because the independent variables in this study consist of several variables.   Results and Conclusion: The results showed that ERM has a positive effect on sustainable finance, GIC has a positive effect on sustainable finance, and BE has a positive effect on sustainable finance. ERM, GIC, and BE can benefit companies in several ways, including improving financial performance, reducing costs, and improving reputation. The results of this study contribute to the development of management accounting and business ethics that sustainable finance is influenced by several important factors, namely ERM, GIC, and BE.   Implications of research: Research shows that ERM can improve financial sustainability in financial institutions in Indonesia, the implication of which is the importance of awareness towards more holistic and integrated risk management within companies. This may mean financial institutions should focus on developing more effective ERM processes, which can help them identify and manage risk in a more efficient way. This research can be used to enrich the sustainable finance literature, especially regarding the development of its measurement. The index measurement uses a disclosure checklist measurement and uses dumies so that it allows the appearance of subjectivity. There is a need for direct verification of some sample companies.