Advanced International Journal for Research

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Impact of Environmental, Social, and Governance (Esg) Performance on Corporate Financial Performance: a Study from Indian Listed Companies

Author(s) Dr.P SRINIVAS REDDY
Country India
Abstract Abstract
financial performance changed following the ESG disclosure period and whether firms with stronger ESG performance demonstrate superior financial outcomes. The study uses a balanced sample of 82 Indian listed companies covering the period from 2018 to 2025. Financial performance is evaluated using Return on Assets (ROA), Return on Equity (ROE), and Tobin's Q, while ESG performance is measured using CRISIL ESG Combined Scores. Paired sample t-tests are employed to compare pre-ESG (2018–2021) and post-ESG (2022–2025) financial performance. The findings reveal that although average ROA Environmental, Social, and Governance (ESG) performance has become an important consideration in corporate decision-making and investment strategies worldwide. In India, the implementation of mandatory ESG disclosures through the Securities and Exchange Board of India (SEBI) has encouraged listed companies to integrate sustainability practices into their business operations. However, empirical evidence regarding the financial consequences of ESG adoption remains inconclusive, particularly in emerging markets. This study investigates whether corporate and ROE improved after ESG disclosure, the changes are not statistically significant. However, firms with stronger ESG performance exhibit significantly higher ROE and market valuation than firms with relatively weaker ESG performance. The results further indicate considerable variation in financial performance even among firms belonging to the same ESG category, suggesting that ESG performance alone does not guarantee superior short-term financial outcomes. The study concludes that ESG functions as a strategic long-term value creation mechanism rather than an immediate driver of profitability. These findings provide useful insights for corporate managers, investors, and policymakers regarding the evolving role of ESG in the Indian corporate sector.
Keywords Keywords: Environmental, Social and Governance (ESG), Corporate Financial Performance, Return on Assets, Return on Equity, Tobin's Q, Composite Performance Index, Indian Listed Companies.
Field Mathematics > Economy / Commerce
Published In Volume 7, Issue 4, July-August 2026
Published On 2026-08-04
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