Analytical framework for ESG portfolio optimization through ecotourism investment management; evidence from the Indonesian banking sector in IKN buffer cities

M. Azis, F. Defung, Herry Ramadhani, Ike Purnamasari, D. Darma, Muhammad Nurhikmat

Abstract

This paper aims to develop and evaluate an analytical framework for optimising environmental, social, and governance (ESG) mutual fund portfolios by integrating green banking performance and ecotourism investment opportunities in the buffer cities of the Capital City of Nusantara/Ibu Kota Nusantara (IKN). This study adopts a multi-objective analytical framework that combines Structural Equation Modeling–Partial Least Squares (PLS-SEM), mean–variance optimization, Monte Carlo simulation, and scenario analysis to evaluate risk-adjusted returns and scenario-based outcomes in ESG portfolio optimization.ESG performance and financial data from ten Indonesian banks are combined with ecotourism potential assessments from field observations and stakeholder interviews in IKN. The results reveal that regulatory support, banking ESG performance, and asset allocation significantly influence ESG portfolio optimization, while ecotourism opportunities act as a strategic complement. Interaction effects between ESG performance and ecotourism potential enhance portfolio resilience under varying scenarios. Mean-variance optimization and Monte Carlo simulations demonstrate that integrating ecotourism investments improves risk-adjusted returns without compromising ESG compliance. Scenario analysis confirms robustness across economic and environmental conditions. 

Source: semanticscholar · PDF

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