Is Green Finally Valuable? Study of Green Transition and Firm Value in Indonesian Energy Companies

Abstract

At a time when the corporate world is making an effort to ‘go green’, this research looks at the trend in a specific area, the Indonesian energy sector, and asks if going green is important to Indonesian energy firms. This study covers the years 2019-2025 and focuses specifically on green investments, carbon emission disclosures, environmental performance, capital structure, and firm value. A descriptive quantitative approach is used with firm data from 15 Indonesian energy companies. For this study, green transition is assessed with green investments, carbon disclosures, and PROPER with capital structure using the Debt to Equity Ratio (DER) and firm value assessed with Tobin’s Q. The study found that Indonesian energy companies greened business practices on a consistent basis. Green investments increased from 0.026 in 2019 to 0.105 in 2025, carbon emission disclosures increased from 0.512 to 0.967, and PROPER scores increased from 3.000 to 4.900. At the same time, DER had a downward trend from 1.321 to 0.691, indicating an improvement in the health of the capital structures, and Tobin’s Q had an upward trend from 1.088 to 1.949, indicating an improvement in the market’s perception of the value of the firms. These results show that the green transition in Indonesian energy firms is demonstrated in environmental efforts and disclosures and is also shown in the financial structure and the market’s response. This study attempts to document the green transition in the energy sector of Indonesia and shows the value of the firm. Other studies might be able to add value to this research and use regression, mediation, and moderation, or PLS-based frameworks to determine the relationship between green investments, carbon disclosures, environmental performance, leverage, and firm value.