THE IMPACT OF GREEN BOND ISSUANCE AND ESG PERFORMANCE ON FIRM PROFITABILITY: EVIDENCE FROM LISTED COMPANIES IN CHINA, SOUTH KOREA AND THAILAND

Concern on the detrimental effects of climate change is one reason for the increased global attention to sustainability issues. Significant investment is required to achieve carbon neutrality by 2050, and financing through green bonds is one alternative to fund green projects. On the other side, ESG criteria are frequently used as a measurement to assess corporations' commitment and actions toward net zero emission target. However, whether the issuance of green bonds and ESG performance can increase profitability is still a big concern for companies. Using panel data from listed firms in China, South Korea, and Thailand from 2016 to 2022, this study employs the Difference-in-Difference (DID) model to investigate the impact of green bond issuance and ESG performance on firm profitability. Furthermore, panel data regression is used to examine the impact of green bond issuance on ESG performance. According to the findings of this study, the issuance of green bonds had no significant impact on ROA or ROE. However, according to the DID regression result, ESG performance (esg_1t) had a positive and significant effect on ROE (at a 10% significance level). This study also discovered that issuing green bonds (green_bond) had a negative and significant impact on the company's ESG performance.


INTRODUCTION
Global awareness of sustainability issues is growing throughout time.This is prompted in part by concerns about the detrimental consequences of climate change.In order to address climate change and its negative impact, world leaders at the United Nations Climate Change Conference (COP21) in Paris signed an agreement in 2016 and is known as the Paris Agreement.The agreement set a target of 45% emission reduction by 2030 and Net Zero Emission (hereinafter referred to as NZE) by 2050.According to BloombergNEF's New Energy Outlook 2022, the amount of investment required to meet the NZE target by 2050 is approximately $194.2 trillion, or almost $7 trillion per year (BloombergNEF, 2022).One method to address this funding issue is to encourage reforms in the global bond market to finance the low-carbon transition program.Bonds have the ability to source long-term debt financing at low costs.It also has access to various types of investors, both domestic and foreign.One of the As explained in Table 1, green bond issuance is dominated by corporate issuers and if the issuing companies are grouped into the country where the company is domiciled, in total there are 69 countries that have issued corporate green bonds by 2022.This research attempts to focus on companies domiciled in the countries included in the Asia Emerging Market Index.
According to the report (MSCI, 2023) explains that there are 8 Asia Emerging Market Index countries, namely China, India, Indonesia, South Korea, Malaysia, the Philippines, Taiwan and Thailand.Data on corporate green bond issuance (excluding the financial sector) in these eight countries can be seen in the table below: Based on Table 2, it can be seen that Indonesia is the country with the second fewest total corporate green bond issuances after the Philippines, with a total of 6 issuances.This implies that companies in Indonesia have not optimized the role of green bonds in funding their green projects.Apart from that, this may be due to the Indonesian government's lack of attention regarding the development and promotion of green bonds in green financing activities so that the incentives that companies get in issuing green bonds are still limited.It should be noted that Indonesia is also a country that is committed to reducing the impact of climate change as stated in the Paris Agreement.In fact, the Financial Services Authority (OJK) had issued Financial Services Authority Regulation Number 60/POJK.04/2017concerning the Issuance and Requirements for Environmentally Sound Debt Securities (Green Bonds) and published the Indonesian Green Taxonomy Edition 1.0 which aims to provide guidance and rules for green bond issuers as well as several related parties such as financial institutions.However, these two tools are still not effective in encouraging the green bond market in Indonesia.
To date, there has been a considerable increase in the usage of sustainable financial instruments, as a growing number of institutional investors include the Environmental, Social, and Governance (hence referred to as ESG) concept into their investing strategies.Investors, governments, and civil society are increasingly interested in sustainable financial development due to its potential to generate long-term business value.ESG factors are also more often used as a tool to evaluate how commitments and actions of companies and financial institutions help in achieving NZE targets (OECD, 2022).With these trends, companies around the world should be aligning their business activities with the concept of sustainability.Companies should be promptly committed and translate it into real action in aligning their business activities with the ESG factor.Otherwise, the firm's risk will increase and investors could consider to not to invest in the company.
In term of the ESG role in firm performances, prior research shows that ESG disclosure increases company financial performance by attracting ESG investors (Chen & Xie, 2022).Furthermore, the ESG concept serves as an investment filter, with investors generally preferring to invest in companies that have a track record of successfully adopting ESG principles, including the management of environmental, social, and governance risks.There are at least two reasons why investors care about ESG investment.First, by focusing on ESG investments, ethical investment practices are actively carried out.Second, ESG is increasingly being considered to improve portfolio performance, increase return rates, and reduce portfolio risk (Broadstock et al., 2021).Issuing green bonds can be an alternative that companies can consider in improving ESG performance.This is based on research results (Zheng et al., 2023) which found that the issuance of green bonds can significantly improve corporate ESG performance, on average increasing ESG scores by around 20.5%.The mechanism test shows that the issuance of green bonds can increase the ease of corporate financing, reduce funding costs and improve the maturity structure of corporate debt.
The preceding explanation implies that the role of green bonds is becoming essential in encouraging green initiatives, with the ultimate goal of achieving the NZE goal.It caused earlier academics were curious in the impact of green bond issuance on corporate performances.According to research (Zheng et al., 2023), green bond issuance can greatly improve ESG performance.According to research (Tan et al., 2022), green bonds can significantly increase company performance as measured by the ROE variable.According to research (Zhou & Cui, 2019), green bond issuance actively contributes to increased profitability, operational performance, and firm innovation capability.However (Yeow & Ng, 2021) in their research found that green bonds had no impact on financial performance.Several researchers, on the other hand, have examined the impact of ESG performance on a variety of company performance indicators, including financial performance of environmentally sensitive companies (Naeem et al., 2022), company share prices (Luo, 2022), company value (Zheng, Li, Ren, & Guo, 2022), and cost of debt (Eliwa et al., 2021).Several studies that specifically examine the influence of ESG on company financial performance include (Naeem et al., 2022), which discovered that overall ESG performance has a significant positive influence on the company's return on equity (ROE) and Tobin's Q, as well as research (Chen et al., 2023), which discovered that ESG scores have a positive effect on a company's return on assets (ROA), particularly in large companies.On the other hand, (Landi & Sciarelli, 2019) examined 54 Italian companies listed on the stock exchange from 2007 to 2015 and revealed a negative relationship between ESG scores and company financial performance.
According to the explanation of previous research findings, it can be seen that those researches were carried out using only independent variables of green bond issuance or ESG performance separately on its impact to company performance.Furthermore, further research is needed to examine the impact of the two variables on company performance in the Asian Emerging Markets, which has similar economic characteristics to Indonesia so the research result could be generalized to Indonesia's point of view.For those reasons, the researcher wanted to dig further and investigate the relationship between green bond issuance and ESG performance to corporate profitability while expanding the scope of the research.Using a sample of the three countries in the Asia Emerging Market that have the largest total corporate green bond issuance and considering the completeness of ESG performance data in the eight countries, therefore this study aims to examine the impact of green bond issuance and ESG performance on listed companies' profitability in China, South Korea and Thailand.

THEORITICAL BACKGROUND Triple bottom line theory
According to its history, a business or firm exists solely to make a profit.However, as a result of the triple bottom line theory and application, several corporations start to see the significance of maintaining a balanced relationship between environmental sustainability, social welfare, and financial success.The triple bottom line (TBL) hypothesis, developed by (Elkington, 1994), focuses on sustainability as the primary goal and integrates three performance measures, namely economic, environmental, and social, allowing businesses to achieve sustainable results.According to TBL philosophy, the most important purpose of a corporation is to preserve long-term profitability.The social sustainability dimension covers include social difficulties, human rights concerns, and health and welfare concerns.Meanwhile, environmental sustainability entails paying attention to the impact of environmental changes and adhering to environmental standards.Today, corporate managers are aware that success is not solely shown by financial statements.As a result, they will become more driven to allign their operational activities with the environmental, social, and economic aspects.Nevertheless, in order to do so, organizations must thoroughly consider all the expenses linked to operating a business that aligns with the Triple Bottom Line (TBL) principle, and ensure that the company does more than just comply with applicable regulations.

Signaling theory
Signaling theory is basically concerned with reducing information asymmetry between two parties (Spence, 2002).Previously, (Spence, 1973) in his major work related to labor markets explained how job applicants can engage in behavior to reduce information asymmetries that hinder the selection ability of prospective employers.Spence illustrates how high-quality job candidates differentiate themselves from low-quality candidates through signals in the form of higher educational information.In a company's point of view, signaling theory explains how the management of a company provides information to investors about management strategies and the company's future perspectives (Brigham & Houston, 2011).Information (signals) about the success or failure of a particular company is a form of disclosure in this signal theory.Good quality companies will consciously give signals to the market, which, according to signaling theory, will be anticipated by the market in distinguishing between good and bad quality companies.In relation to signaling theory with this research, (Zheng, Jiang, Cui, & Shen, 2023) states that the issuance of green bonds by companies will give a signal to the financial market that they are involved in green projects and green economic activities.Furthermore, providing this signal can make the company more environmentally friendly and can build a positive social image.

Green bond
Companies generally do not have sufficient resources and do not get the benefits of investing themselves in green projects due to the high risk levels of such investments.Green bond is a relatively new financing instrument aimed at improving environmental efficiency and can be the answer to the big problem of investment funding because they can provide direct financing for investments in corporate green projects (Zheng, Jiang, Cui, & Shen, 2023).According to (OECD, 2015), green bonds have financial characteristics that are not much different from other bonds, namely that they are fixed income financial instruments aimed at obtaining capital from investors through the debt capital market.The bond issuer collects a fixed amount of capital from investors over a certain period of time ("maturity"), repays the capital ("principal") when the bond matures and pays an agreed amount of interest ("coupon") throughout the period.Green bonds are distinguished from ordinary bonds by a label, i.e. defined as "green" by an issuer or other entity outside the company, where such a label indicates a commitment to use the proceeds of green bonds in a transparent manner, and exclusively to finance or refinance green projects, assets or business activities with an environmental benefit.(Climate Bonds Initiative, 2018) had released a taxonomy which aims to serve as a guide in determining whether a project can be categorized as a green project.This will also be useful in seeing how the funds or proceeds that the company has managed to obtain from investors through green bonds are actually used in practice to develop green projects or not.This taxonomy is a tool for companies, investors and governments to help them understand what key investments will lead to a low-carbon economy.Broadly speaking, the climate bonds taxonomy is divided into eight (8) sectors, namely: (1) energy; (2) transportation; (3) water; (4) buildings; (5) land use and resources; (6) industry; (7) waste; and (8) ICT, where each sector has several criteria so that it can be categorized as a green project.

Environmental, Social and Governance (ESG)
To date, there has been a considerable increase in the usage of sustainable financial instruments such as green bond, as a growing number of institutional investors include ESG criteria into their investing strategies.ESG is the acronym for Environmental (E), Social (S), and Governance (G), which is an investment philosophy that integrates corporate environmental responsibility, social responsibility and corporate governance performance into investment decision-making (Lian, Ye, Zhang, & Zhang, 2023).ESG is a comprehensive concept, which does not only focus on company profits but things that do not harm the environment and its surroundings.Not only environmental aspects but social aspects are also considered, such as how the company pays attention to employee welfare and relationships with stakeholders.As a systematic methodology for promoting sustainable corporate development, ESG is a non-financial corporate evaluation system that concentrates on the environment, society and governance, and pushes companies from initially pursuing maximization of their own interests to maximizing social interests, which is not only a core framework and internal requirements for enterprises to pursue green development, but also an important starting point for promoting high-quality community economic development (Chen, Li, Zeng, & Zhu, 2022).The combination of ESG factors will strengthen management practices to improve company performance because it is important to stakeholders.Investors pay more attention to company practices in terms of sustainability than to company operations and revenue.Companies that disregard environmental, social, governance factors, and do not integrate ESG criteria into business activities will face investor rejection (Shakil, 2021).

The impact of green bond issuance on corporate performances
The green bond issuance trend has continued to show a significant annual increase since 2016, or after the approval of the Paris Agreement.This implies that more and more green projects are being launched because in theory the funds collected from the financing process through green bonds are used to finance or refinance "green" projects, assets or business activities with an environmental benefit (OECD, 2015).However, it is imperative to examine the potential impact of issuing green bonds on both environmental benefits and future corporate success.When corporations issue green bonds, they will take into account many elements including their prospective performance, the preferences of green investors, and the support provided by local governments (Bauer and Smeets, 2015).Company performance plays an important role in decision-making behavior, which will directly influence green bond issuance.This has prompted several studies to examine the impact of green bond issuance on company performance.Using panel data from public companies in China from 2010 to 2020, (Tan et al., 2022) found that issuing green bonds can significantly improve company performance with an overall impact of 1.65%.In addition, (Zhou & Cui, 2019) analyzes the impact of green bond issuance on its issuer using data from Chinese issuer that has issued green bonds since 2016.They found that the announcement of the issuance of green bonds had a positive impact not only on the company's stock price, corporate profitability, and operational performance, but also on the capacity for innovation, and could boost corporate CSR.(Flammer, 2021) found that the stock market responded positively to the announcement of green bond issuance which responded stronger to green bonds certified by independent third parties and to the first issue.(Khurram et al., 2023) found that the issuance of green bonds by a company had a significant positive influence on improving the company's innovation performance and value.On the other hand, (Yeow & Ng, 2021) in his research using a sample of green bonds and conventional bonds issued between 2015 and 2019 by corporations from different countries, found that green bonds were effective in improving environmental performance if the bonds were certified by a third party.However, further analysis shows that green bonds have no impact on financial performance.

The impact of ESG performance on corporate performances
In the pursuit of mitigating the adverse consequences of climate change, the incorporation of environmental, social, and governance (ESG) considerations emerges as a crucial component in evaluating the extent to which an organization has embraced the principles of sustainability.This is what underlies many researchers who are trying to examine the impact of ESG performance attributed to corporate performances in recent years.A study demonstrated a significant and positive correlation between the overall environmental, social, and governance (ESG) performance of companies operating in environmentally sensitive sectors and their return on equity (ROE) and Tobin's Q.This finding implies that companies with superior ESG performance tend to exhibit enhanced profitability and contribute to the augmented market valuation of the organization (Naeem et al., 2022) From these explanations, we can determine the first and second hypothesis as follows: H1: Green bond issuance and ESG performance have an impact on the company's ROA.H2: Green bond issuance and ESG performance have an impact on the company's ROE.

The impact of green bond issuance on ESG performance
The ESG considerations emerges as a crucial element in evaluating the extent to which an organization has embraced the principles of sustainability.In recent years, numerous academics have endeavored to examine the potential correlation between environmental, social, and governance (ESG) performance and its impact on companies' financial performance, stock price, and overall company value.The environmental pillar is the most related pillar to climate change issues and green projects.To support the achievement of NZE's goals, one of the program is to start promoting and developing green finance, especially in terms of green financing.(Zheng et al., 2023) explained in their research that as a direct financing channel in the green finance system, green bonds have grown into an important source of external funding for corporate green projects.Green bonds can improve the efficiency of allocating financial resources to green projects, expand the external financing channels of companies, improve the availability of investment funds, reduce financing costs, optimize corporate debt maturity structure, and improve the long-term stability of funds.The issuance of green bonds encourages companies to pursue green activities, thereby improving the company's environmental performance and ultimately improving their ESG performance.This study found that issuing green bonds can significantly improve corporate ESG performance, with an average increase in ESG scores of about 20.5%.Mechanism tests show that issuing green bonds can improve corporate financing facilities, lower financing costs, and improve the structure of corporate debt maturity.However, (Flammer, 2021) in his research explained that the issuance of green bonds can be one form of greenwashing, that is, the creation of unfounded or misleading claims about corporate environmental commitments.Furthermore, he stressed that practitioners have expressed concerns about the potential motives of greenwashing underlying the issuance of green bonds.For example, referring to the rapid growth of the green bond market, some parties have begun to question the value of these (green bonds) innovations, in particular whether green bonds make a real difference or just another case of greenwasing.If the greenwashing motives dominate, then the environmental performance would be worse, or at least there will be no improvement after the issue of a green bond.Finally, we may state the third hypothesis as follows: H3: The issuance of green bonds has an impact on the company's ESG performance.

METHODOLOGY Data and samples
The study uses a difference-indifference (DID) approach to examine the impact of green bond issuance and ESG performance on listed companies' profitability in China, South Korea and Thailand.DID is used to evaluate the actual results of a policy or project by comparing the differences between the treatment group and the control group before and after implementing the policy or project (Flammer, 2021).Therefore, the purposive sampling method is a suitable method for determining samples in this study.In this stage, it will be identified which companies have ever issued green bonds and which have never.

Variables
The independent variables in this study are green bond issuance and ESG performance.The data of the company issuing the green bond and the time of issuance were obtained through the data collection process from Refinitiv platform.Based on previous research, issuing green bonds can significantly improve corporate financial performance with an overall impact of 1.65% (Tan et al., 2022).The same goes for the ESG performance data obtained through Refinitiv.According to research (Naeem et al., 2022) shows that overall ESG performance in environmentally sensitive companies has a positive and significant relationship with ROE and Tobin's Q, which suggests that higher ESG performances have a positive impact on profitability and contribute to increased market value of these companies.
Based on previous research, (Tan et al., 2022) used Return on Equity (ROE) as a measure of company performance in analyzing the impact of green bond issuance on company financial performance.While (Zhou & Cui, 2019) uses Return on Asset (ROA) as a measure of profitability.Therefore, this study uses ROA and ROE as a measure of financial performance.ROA is an accounting-based measurement that can be used to describe the financial performance of a company.This ratio shows how successful and efficient a business is to use its total assets in the production and operational processes to generate profits so that it reflects the operational performance of the business.Here's the formula of the ROA: ROA = Net Income After Taxes/Total Asset ROE is an accounting-based measure that reflects a company's financial performance.Moreover, ROE is a profitability ratio that represents the financial performance and the ability of a company to generate revenue.Here is the formula of ROE: ROE = Net Income after Taxes/Total Equity In addition, to test model (3), the ESG performance that in models (1) and ( 2) is independent variable, it becomes dependent variables in model (3) to examine the impact of green bond issuance on ESG performance.This study incorporated control variables as a characteristic of the company in the research model to avoid biased judgments and get a real impact of the issuance of green bonds on the company's ESG performance.The control variables include leverage, liquidity, and total assets.Leverage: the ratio of total debt to total assets.Liquidity: the proportion of the liquid asset to the total asset.Total assets: the natural logarithm of the total assets in the company.

Research model
First, the study examines the impact of green bond issuance and ESG performance on the profitability of companies represented by the ROA and ROE proxy.The approach used is the Difference-in-Differences (DID) model where this model is used to evaluate the impact of policies, evaluate actual outcomes of policies or projects by comparing the differences between treatment groups and control groups before and after the implementation of a policy or project (Flammer, 2021).Thus, the regression model used in the first stage can be described as follows: Where ROAi,t and ROEi,t represent the performance of the ROA and the ROE of the company i at the time of t.Issuei is a grouping variable for a company that has issued green bonds, with 1 for the company that had issued a green bond, otherwise 0. Datei,t is a time grouping variable, with 1 for the year in which the company issued the green bond and the period after it, otherwise 0.Then, the interaction of these two variables will form a new variable, namely green_bond, which is a dummy variable that shows whether a company is included in the treatment group (1) or control group (0).ESGi,t-1 represents the company's ESG performance i at the time of t-1 (Naeem et al., 2022).Controlsi,t represents the corporate-level control variable, εi,t is the residual term and α is the constant term.The β0, β1 and βi coefficients are used to measure the impact of green bonds, ESG performance and several control variables on a company's profitability, and if significant positive indicates that those variables can significantly improve the profitability of a company, otherwise the opposite.
Furthermore, the study also tested the impact of green bond issuance on company i's ESG performance at time t+1 in line with the study (Zheng et al., 2023).At this stage, panel data regression analysis technique is used.Thus, the second stage regression model can be described as follows:

ESGt+1= α + β0(Issuei × Datei,t) + βiControlsi,t + εi,t (3) Analysis method
There are two regression techniques used in this study, namely the Difference-in-difference (DID) model and the panel data regression.The DID is used to evaluate the actual outcome of a policy or project by comparing the differences between the treatment group and the control group before and after implementing the policy or the project (Flammer, 2021).Furthermore, in practice, the DID model eliminates most of the heterogeneity and avoids the influence of endogenicity.If the estimator coefficient on DID is significant and greater than 0, then this indicates that the policy or project has a positive impact, otherwise it will have a negative impact.In this research, those included in the treatment group are companies that have issued green bonds, while the control group is the opposite.In panel data regression, a number of tests will be performed to determine the best model.The first is the Chow Test to choose whether the Common Effect Model (CEM) or the Fixed Effect model (FEM) is more suitable to estimate the model.The second is the Hausman Test to determine whether the FEM or Random Effect Models (REM) is more suitable.Then the last one is the Lagrange Multiplier Test to compare whether CEM or REM is better.From these three tests, it will be known which estimation model is the best to use in this research.
The next is the classical assumption test by performing the multicolinearity test and the heterocadastasis test.The multicolinerity test is performed to test whether there is a correlation between independent variables (Ghozali, 2018).This multicolinearity test is based on the tolerance and Variance Inflation Factor (VIF) values.If the VIF value is < 10, then there is no multicolinerity.In addition, the multicollinearity test can be CAKRAWALA -Repositori IMWI | Volume 6, Nomor 6, Desember 2023 p-ISSN: 2620-8490; e-ISSN: 2620-8814 carried out using the Pearson Correlation approach.Pearson correlation provides a value between −1 and 1, where 0 indicates no correlation between two variables, 1 indicates total positive correlation, and −1 indicates total negative correlation.A correlation value of 0.7 between the two variables indicates that there is a significant and positive relationship between the two (Nettleton, 2014).
A good regression model is that of a homoskedasticity or no occurrence of a heteroscadastisity.Some conditions when heterocadasthesis occurs are the main concern in regression analysis because it can invalidate a statistical significance test that assumes that all residues have the same variance, so it requires a heterocadastaticity test.According to (Ghozali, 2018) explained that the heteroskedastisity test aims to test whether there is a residual variance inequality in a regression model.To test whether there is heterocadastasis, one can be done using the Breusch-Pagan test (Breusch & Pagan, 1979).

RESULTS AND ANALYSIS Descriptive statistics analysis
Based on the research sample which includes three countries in emerging Asia with the most corporate green bond issuance, it is known from the results of descriptive statistics that South Korea is the country with the largest sample composition with a total sample of 96 companies and 18 of them have issued green bonds.Meanwhile, China is the country with the second largest sample contributor with 59 companies and 15 of them issued green bonds and Thailand with 28 sample companies with 4 of them issuing green bonds.In total, the sample in this study was 183 companies.3, the Industrials sector is the sector with the largest sample with 51 companies, while the Real Estate sector is the sector with the smallest number of samples.It implies that corporate green bond is more common in sector where the environment is likely core to the firms' operation.This research examines the effect of green bond issuance and ESG performance on company profitability.The variables used to measure profitability are ROA and ROE.For the ESG variable, the ESG score obtained through Refinitiv is used, where to test H1 and H2 we use ESG at time t-1, while to test H3 we use ESG at time t+1.Green_bond in this study is a dummy variable that shows the interaction between the company issuing the green bond (Issue) and the time of issuance (Date).The following are descriptive statistics for each variable, including the control variables used.

Difference-in-difference
As explained in research methods section, there are two analysis CAKRAWALA -Repositori IMWI | Volume 6, Nomor 6, Desember 2023 p-ISSN: 2620-8490; e-ISSN: 2620-8814 techniques used in this research, namely the Difference-in-Difference (DID) model to test H1 and H2 and panel data regression to test H3.DID is used to evaluate the actual results of a policy or project by comparing the differences between the treatment group and the control group before and after implementing the policy or project (Flammer, 2021).In this research, what is included in the treatment group is a group of companies that have issued green bonds, on the other hand it is included in the control group so that it can be tested whether the issuance of green bonds can affect profitability as indicated by ROA and ROE.There are 183 companies (id) in total which 37 ids are included in the treatment group (green_bond = 1), and 146 ids are included in the control group (green_bond = 0).In this DID model, another independent variable is also included, namely esg_1t, which is the company's ESG performance at time t-1.The DID regression results in testing the effect of green bond issuance and ESG performance on company ROA and ROE are as follows: It can be seen from Table 6 and Table 7 that the issuance of green bonds does not have a significant effect on ROA or ROE.This implies that there is no significant difference in profitability between companies that have issued green bonds and companies that have never issued them.Based on several relevant references, it can be seen that the impact of green bond issuance on company profitability is complex.There are several studies showing that green bond issuance could have a positive impact on a company's share price (Zhou & Cui, 2019), profitability (Tan et al., 2022), ESG performance (Zheng et al., 2023), innovation performance and value company (Khurram et al., 2023) as well as environmental performance (Fatica & Panzica, 2021).However, on the other hand, several studies found that issuing green bonds does not always increase company profitability.(Lebelle et al., 2020) on their research stated that the green premium, which would make green bonds cheaper than conventional bonds, may not apply to green bond issuance with high underlying asset volatility, high parameters governing green technology, and low corporate tax rates.This implies that the financial benefits of green bond issuance can be influenced by various factors.In addition, research (Yeow & Ng, 2021) showed that green bonds have no impact on financial performance and (Sisodia, Joseph, & Dominic, 2022) found that green bonds can indeed mitigate the decreasing in firm value during shocks (Covid-19), however does not necessarily result in an increase in company profitability.The ability to withstand a crisis does not guarantee increased profitability in the long term.Based on research (Sim & Kim, 2019), argued that companies that are committed to environmental sustainability may face challenges in maintaining profitability when in competition with other companies.This study shows that commitments made by one company can provide unexpected results, making competitors have a higher increase in profits.Although green bonds have the potential to improve environmental sustainability, they may not do much to increase profitability.As we know, green bonds are closely related to environmental sustainability goals, but factors such as competitive pressures, higher debt costs, and the unique character of green investments can limit their impact on a company's profitability.
Apart from that, from the results of the DID regression that has been carried out, it was found that ESG performance (esg_1t) has a positive and significant effect on ROE at a significance level of 10%.This implies that the higher the ESG performance, the greater the company's profitability (ROE).This finding supports prior research result (Naeem et al., 2022).The positive impact of ESG performance on company profitability shows that investing in and expanding ESG activities can bring companies financial benefits while maintaining environmental and social sustainability.

Data panel regression
The panel data regression analysis technique was used to H3 where the study wanted to test the impact of green bond issuance on the company's ESG performance.However, before carrying out regression analysis, several tests need to be carried out to determine which estimation model is most suitable for use in testing this hypothesis.As is known, there are three estimation models, namely the Common Effect Model (CEM), Fixed Effect Model (FEM) and Random Effect Model (REM), so these three estimation models will be carried out first.After getting statistical results for the three estimation models, the next step is to carry out the Chow Test to test whether the CEM model or the FEM model is more suitable.After that, the Hausman Test was also carried out to test whether the FEM or REM model was more suitable.Then the last step is to carry out the Lagrange Multiplier Test to compare the CEM or REM models which is more suitable for analyzing panel data in this research.The following are the statistical results of the three tests carried out: From the statistical results of the three tests above, it can be determined that the most suitable estimation model for this research is the Random Effect Model (REM).One of the advantages of using REM regression is that it can eliminate the symptoms of heteroscedasticity, namely a condition where the error variance (residual) is not constant, so that in this research the heteroscedasticity test does not need to be carried out.

Multicolinearity Test
The multicollinearity test was conducted to test whether a correlation was found between the independent variables (Ghozali, 2018).In this test, if the VIF value is < 10, it can be interpreted that multicollinearity does not occur.If the VIF value is > 10 then there is multicollinearity between the research variables used.After carrying out the test, no multicollinearity was found between the independent variables as indicated by a VIF value of less than 10 as in the table below.To confirm that there were no multicollinearity issues in this study, a second multicollinearity test was carried out using the Pearson correlation matrix approach.The Pearson correlation provides a value between −1 and 1, where 0 indicates no correlation between two variables, 1 indicates total positive correlation, and −1 indicates total negative correlation.A correlation value of 0.7 between two variables indicates that there is a significant and positive relationship between the two (Nettleton, 2014).The test results shown in Table 4.7 show that there is no multicollinearity issue where the correlation coefficient for each variable is below 0.7.

Endogeneity Issue
Based on research (Zheng et al., 2023), it was stated that corporate green bond issuance is not completely an exogenous event, and there may be an inverse causal relationship between green bonds and ESG performance, which may cause bias in the estimation.The reverse causality in this study can be caused by two things: (1) green bonds can be an indicator of ESG performance and (2) companies with good ESG performance are more likely to issue green bonds, so ESG performance is an important factor influencing issuance green bonds.First, it is important to note that the Refinitiv ESG performance assessment methodology used in this research does not include green financing or green bond indicators.Therefore, it can be concluded that green bond issuance does not have a direct link to ESG performance, which means that ESG performance and green bond issuance are not determined by the company at the same time.Second, based on previous research conducted by (Naeem et al., 2022), they used one-year lag in financial performance data to assess the exact impact of ESG performance on company financial performance and to eliminate endogeneity problems.Therefore, this is also adopted for this research model where in model equations 1 and 2, the ESG performance used is ESG at t-1 to test the effect of ESG performance on the company's ROA and ROE as well as in model equation 3 which uses ESG performance at t+1 in testing the effect of green bond issuance on company ESG performance.
In addition, Graphic 2 shows the ESG performance of companies with (GB) and without (Non GB) green bonds in two different groups.The vertical axis shows the average value of ESG performance, while the horizontal axis represents groups of companies with high (HighESG) and low (LowESG) ESG performance, and the dark gray bars represent companies with green bond issuance.As can be seen from the comparison, it is known that whether a company issues green bonds or not does not affect the average ESG performance.The average value in the group with high ESG performance is almost the same with or without green bond issuance.Therefore, this confirms that there is no clear two-way causality between green bond issuance and a company's ESG performance.

Random effect model regression result
This research also examines the effect of green bond issuance on company ESG performance, where the analysis technique used is REM panel data regression.In accordance with research (Zheng et al., 2023) that the measure of the company's ESG performance being tested is ESG performance at t+1, this takes into account the factor that the impact of green bond issuance will be visible with a one-year lag.As we can see, the regression result shows that the issuance of green bonds has a negative and significant effect on the company's ESG performance.This negative influence implies that companies issuing green bonds will experience a decline in ESG performance in the following year after issuance.This result is in contrast to the results of previous research conducted by (Zheng et al., 2023) which found that the issuance of green bonds improved the company's ESG performance.
However, several previous studies have had similar findings.(Lebelle et al., 2020) conducted a study on corporate green bond issuance and found that the market reacted negatively to the announcement of green bond issuance.This shows that the issuance of green bonds may have a negative impact on company performance, including ESG performance.On the other hand, (Fatica & Panzica, 2021) compared green bond issuing companies with conventional bond issuers and found that green bond issuers did show a reduction in the carbon intensity of their assets after lending to the environmentally friendly segment.This implies that green bond issuers may prioritize reducing their carbon footprint at the expense of other ESG pillars.Apart from that, another argument that might explain the reason why the issuance of green bonds can have a negative effect on a company's ESG performance is the phenomenon of greenwashing.This term also follows along with research findings that explain the various benefits for companies in issuing green bonds.Greenwashing is a situation where a company intends to engage in green investments to attract impact-oriented investors, while in practice investing in ones that have low environmental value (Grene, 2015).Companies will be interested in entering the green bond market with the aim of benefiting from lower financing costs as well as positive investor response.If the problem of greenwashing is more dominant, then green bonds are unlikely to have a real beneficial impact on the company's ESG performance.(Flammer, 2021) stated that issuing green bonds can be a form of greenwashing, which is the practice of making unfounded claims regarding a company's commitment to the environment.In this case, companies will issue green bonds to portray themselves as environmentally responsible companies but without taking real action.In the rapid growth of the green bond market, there are some parties who are starting to question the value of this innovation, specifically asking whether green bonds make a real difference or are just greenwashing.This concern stems from weak public governance of corporate green bonds.

CONCLUSION
This research examines the green bond markets in China, South Korea and Thailand, which has been increasing in recent years.Data on issuers in the three countries that have issued green bonds from 2016 to 2022 was analyzed to determine the impact of their issuance on company performance, especially profitability as represented by ROA and ROE, using the difference-in-difference (DID) model.Apart from that, analysis of the impact of green bond issuance on company ESG performance was also carried out using panel data regression analysis.Several findings from the analysis results in this research are: (1) the issuance of green bonds has no effect on the company's ROA or ROE.This implies that the financial performance (profitability) of companies that have issued green bonds was not significantly different to the profitability of companies that have not issued green bonds.(2) The company's ESG performance has a positive effect on the company's ROE at a significance level of 10%.This implies that the better a company is at integrating its business activities with ESG factors, the more it will increase the company's profitability.
(3) The issuance of green bonds has a negative effect on the company's ESG performance, which implies that companies that issue green bonds will experience a decline in ESG performance in the following year after issuance.
Based on a theoretical point of view, finding (1) is contrary to the signaling theory which underlies the argument that issuing green bonds is one way for companies to provide information to investors that their company is a good company because they are committed to environment, then creates a positive response from investors thus provide financial benefits to the company.This finding supports several previous studies which found that green bond issuance had no effect on the company's financial performance (Yeow & Ng, 2021), (Sisodia, Joseph, & Dominic, 2022).Finding (2) which proves that the company's ESG performance has a positive effect on the company's ROE supports the Triple Bottom Line theory.The positive impact of ESG performance on company financial performance shows that investing and expanding operational activities that are in line with the ESG concept can bring financial benefits along with maintaining environmental and social sustainability (Naeem et al., 2022).Meanwhile, finding (3) supports the greenwashing phenomenon which states that companies will issue green bonds to portray themselves as environmentally responsible companies but without taking real action (Flammer, 2021), resulting in no improvement in environmental performance and even a decline.
The results of this research provide views and references for several parties in Indonesia in their way to achieve the NZE target.The first is for company management, where with the results of this research, companies in Indonesia need to review their plans for using green bond instruments in financing green projects and perhaps consider other financial instruments that could be beneficial for their financial performance.Furthermore, if they are going to use green bonds in financing those projects, the management needs to ensure that the funds collected are actually used for green projects that fall into the specified green category.In addition, companies need to continue to increase the implementation of ESG practices because it will encourage sustainable company growth.Second, for the government, there needs to be a real effort to develop and promote green finance in Indonesia so that the use of green bond instruments can provide benefits for both companies and investors.The government needs to create a conducive environment, whether through policies or regulations, so that actors involved in the energy transition program have confidence that the use of green bond instruments can provide financial benefits and improve environmental sustainability while also suppressing greenwashing practices.Some things that the government needs to pay attention to are the rules regarding "use of proceeds", the project selection and evaluation process, reporting and external reviews which are several procedures to encourage transparency and disclosure, two important factors that determine the success of the green bond market (Fatica & Panzica, 2021).Lastly, for ESG investors, the results of this research can be used as material consideration before making investment decisions regarding how to ensure whether a company is truly committed to environmental sustainability.Investors can also consider investing in companies in countries that have credible green finance regulations or guidelines.
I realize that this research has limitations in its analysis so this study calls for future research.Several things that can be considered are as follows: 1. Expand the scope of research objects to better represent green bond market conditions in the Asian Emerging Market.2. With the increasing trend globally in term of the use of green bonds as financing instrument, it will also occur in Indonesia eventually.Thus, that research regarding the impact of green bond issuance on company performance in Indonesia also needs to be carried out in the future.3. Future research could consider to add another proxy for company performance as a dependent variable such as firm value or stock performance.4.This research only examines the impact of green bond issuance on profitability and ESG performance, but does not analyze the "use of proceeds" of the green bonds.Therefore, it is necessary to conduct further studies on how the implemention the "use of proceeds" of the issuing company is, so that the analysis results can be more comprehensive.5. Apart from overall ESG performance, future research can consider include variables for each ESG pillar scores, namely Environmental, Social and Governance.

ESG Performance Comparison Table 11. Random Effect Model (REM) Regression Result
Table 11 below shows the results of the regression that has been conducted.