Hanna Janah

Type of the article: Research Article

Abstract
Green investment is crucial in supporting the transition to a sustainable economy, yet the internal factors driving it remain poorly understood. This study examines the influence of corporate governance (CGI), sustainability bonds, and labor costs on green investment in manufacturing firms in Indonesia. Using 779 observations (firm-years), the analysis employed a panel regression model and a moderation test for capital expenditure (CapEx). The results show that CGI significantly positively affects green investment, highlighting the importance of strong governance in supporting sustainability practices. The implementation of effective corporate governance can replace tunnelling practices and direct corporate funds toward environmentally friendly investments. Sustainability bonds also have a significant positive impact, reflecting the development of green financial instruments in Indonesia. The existence of sustainable bonds provides investors with confidence that their funds are channeled toward sustainable goals, while also helping companies reduce funding costs and accelerate the growth of green investments. Labor costs exhibit a significant positive effect, indicating that firms with higher labor costs are more likely to adopt green technology-based efficiency measures. The moderation test found that CapEx strengthens the relationship between CGI and green investment, indicating that capital expenditure can be a strategic channel for realizing governance commitments to sustainable investment.

Acknowledgments
The greatest appreciation is conveyed to the Directorate General of Higher Education, Research, and Technology, Ministry of Education, Culture, Research, and Technology, which has provided funding support for this research through a principal research grant with contract number 127/C3/DT.04.00/PL/2025. Thanks are also expressed to the Higher Education Service Institute (LLDIKTI) Region 6 and the Institute for Research and Community Service (LPPM) Unisnu Jepara, Indonesia, for their continuous support and facilitation during the research process.