The Nexus of ESG and Intellectual Capital in Enhancing Firm Value During the Energy Transition
DOI:
https://doi.org/10.31603/conference.17394Keywords:
ESG, intellectual capital, firm value, PLS-SEM, energy sectorAbstract
Shifts in investor expectations have made environmental, social and governance (ESG) performance and intellectual capital two of the most discussed determinants of firm value. Yet empirical evidence on their joint effect - particularly in extractive industries - remains mixed. This study investigates: (1) whether ESG performance influences firm value; (2) whether ESG influences intellectual capital; (3) whether intellectual capital influences firm value; and (4) whether intellectual capital mediates the ESG–firm value relationship. The sample consists of 47 energy-sector companies listed on the Indonesia Stock Exchange, observed over 2022–2024, yielding 102 firm-year observations. ESG disclosure was measured against GRI standards, intellectual capital was proxied by VAIC, and firm value by Price-to-Book Value (PBV). Analysis used Partial Least Squares Structural Equation Modelling (PLS-SEM). None of the four hypotheses were supported. ESG had a negative but non-significant path to firm value (and a negligible path to intellectual capital. Intellectual capital did not significantly predict firm value, and the indirect effect of ESG through intellectual capital on firm value was trivial. These findings suggest that, in Indonesia's energy sector, conventional financial fundamentals still dominate investor valuation decisions, while ESG and intellectual capital have not yet translated into market-recognized value drivers.
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