Environmental Performance, Environmental Costs and Financial Performance

Abstract

The purpose of this research was to determine the effect of environmental performance and environmental costs on financial performance. This research uses a quantitative method. Purposive sampling method is used in sample selection in which the companies studied are mining and manufacturing companies in Indonesia which are listed on the Stock Exchange. This research uses ratio analysis to measure financial performance and measure environmental performance sorted by PROPER rating, to measure environmental cost used data obtained by looking for a percentage of the environmental cost and then statistical methods to test the hypothesis. The results of this research indicate that only the environmental costs has an effect on the financial performance of mining and manufacturing companies with a significant level 0.047. It means that the disclosure of environmental costs carried out by mining and manufacturing companies in Indonesia for the 2014-2018 period has an impact on financial performance, and the company's concern, both in terms of costs for environmental prevention, costs for environmental detection, costs for internal failure and costs for external environmental failure can minimize the risk of environmental pollution.