ESG FACTOR ANALYSIS IN INVESTMENT DECISIONS BASED ON CORPORATE GOVERNANCE, FINANCIAL PERFORMANCE, AND SUSTAINABILITY

Abstract

Investment decisions are increasingly influenced by Environmental, Social, and Governance (ESG) factors due to increasing awareness of corporate sustainability and transparency. ESG plays a crucial role in assessing investment risks and opportunities based on corporate governance, financial performance, and operational sustainability. However, there is still a gap in understanding how ESG directly influences investor decisions in the capital market. Therefore, this study aims to analyze the relationship between ESG factors and investment decisions, taking into account aspects of corporate governance and financial performance as the main variables. This study uses a literature study method with a qualitative approach, examining various academic sources, corporate financial statements, and ESG-related regulations in the last five years. The analysis was carried out using content analysis and thematic analysis methods to identify patterns, trends, and challenges in ESG implementation. The results show that companies with high ESG scores tend to have more stable financial performance and are attractive to long-term investors. Strong corporate governance also plays a role in increasing transparency and reducing investment risk. However, some obstacles are still found, such as differences in ESG reporting standards and lack of uniform regulation. Therefore, increased transparency in ESG reporting as well as more sustainability-based investment policies are needed.