CARBON PERFORMANCE AND FINANCIAL RESILIENCE: EVIDENCE FROM INDONESIAN BANKING SECTOR

Abstract

This study investigates the impact of carbon performance on the financial performance of banking companies listed on the Indonesia Stock Exchange (IDX) during the period 2020–2024. Unlike prior studies that predominantly focus on manufacturing or extractive sectors, this research highlights the banking industry, which plays a pivotal role in sustainable financing and carbon transition strategies. Carbon performance is measured by the efficiency of carbon emission management, while financial performance is evaluated using a combination of regulatory-based indicators (Risk Profile/NPL, Good Corporate Governance/GCG, Earnings/ROA, and Capital/CAR) and a market-based measure (Market-to-Book Ratio/MBR). The findings are expected to provide empirical evidence on whether stronger carbon performance translates into enhanced financial stability, profitability, and market valuation. By integrating regulatory and market perspectives, this study contributes to the growing discourse on sustainable finance, offering practical implications for banking institutions, investors, and policymakers in navigating the transition toward a low-carbon economy in emerging markets.