Green Investment on Firm Value: Mediation of Profitability

Backgorund: Global warming is an increase in the earth's surface temperature due to the use of environmentally unfriendly products. Therefore, investors and companies need to be aware of the impact of global warming by adopting the concept of green investment. Purpose: This research aims to determine (1) the effect of green investment on firm value; (2) profitability mediates the effect of green investment on the firm value. Methodology: A sample of 24 SRI KEHATI stock index companies in the third quarter of 2023 and have Environmental, Social and Governance (ESG) value reports on Morningstar Sustainalytics. Partial Least Square with the SmartPLS application as a data analysis technique. Findings: (1) Green investment influences firm value; (2) profitability does not mediate the effect of green investment on the firm value. Conclusion: Investors can adopt the green investment concept through ESG score indications thereby increasing firm value and sustainable long-term financial profits.