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Nexus between ESG Scores and Financial Performance of Select Indian Companies

In: Proceedings of the 3rd International Conference on Artificial Intelligence in Economics, Finance and Management (ICAIEFM 2025)

Author

Listed:
  • A. P. Ashida

    (Kerala University of Fisheries and Ocean Studies (KUFOS), Research Scholar, Dept. of Business Administration and Management)

  • E. M. Afsal

    (Kerala University of Fisheries and Ocean Studies (KUFOS), Professor, Dept. of Business Administration and Management)

  • U. Mohammed Roshif

    (Malabar College of Advanced Studies, Assistant Professor, Dept. of Management Studies)

Abstract

The research examines the link between financial performance and sustainable practices reflected by ESG (Environmental, Social, and Governance) scores in select Indian companies. We employ a sample of thirty companies with the highest ESG scores from the Nifty 100 ESG index, and examine how their financial performance is impacted by their performance in ESG criterion scores. The study analyses accounting as well as market data for a period of five years from 2020 to 2024 using Fixed Effect regression and System GMM (System Generalized Method of Moments) model and correlation matrix. The model includes Tobin’s Q, Return on Asset (RoA), and Return on Equity (RoE) as dependent variables, while ESG performance as the main independent variable. The result of the study reveals a better ESG performance causes financial performance, reiterating the need for sustainability reporting-which includes disclosing ESG scores. This would help sustainable investment practices as well as company practices. The findings have significance for investors, corporations, regulators, and legislators.

Suggested Citation

  • A. P. Ashida & E. M. Afsal & U. Mohammed Roshif, 2025. "Nexus between ESG Scores and Financial Performance of Select Indian Companies," Advances in Economics, Business and Management Research, in: Bejoy Joseph & Devi Sekhar R (ed.), Proceedings of the 3rd International Conference on Artificial Intelligence in Economics, Finance and Management (ICAIEFM 2025), pages 114-138, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6463-896-7_7
    DOI: 10.2991/978-94-6463-896-7_7
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