Aastha Chaturvedi
Finance
June 2025
This research explores the effects of Environmental, Social, and Governance (ESG) investments on improving Indian corporate financial performance in a fast-growing economy with distinctive sustainability issues. Using a rich dataset of Indian companies listed on the National Stock Exchange between 2015 and 2022, the study uses sophisticated econometric methods, such as fixed-effects and quantile regression models, to examine the association between ESG scores and financial performance measures like Return on Assets (ROA), Return on Equity (ROE), and Tobin's Q.The results show a complex effect of ESG practices on financial performance. Although the social and governance pillars reflect a positive correlation with financial performance, the environmental pillar reflects a less uniform impact across industries. Most notably, resource companies reflect poorer ESG performance, and specifically in environmental factors, reflecting the sectoral difficulties of adopting sustainable practices. In addition, the research finds that firms with bigger size and more intangible assets and greater analyst coverage perform better on ESG scores, implying that size and visibility facilitate adoption of sustainable behaviors.These findings highlight the necessity of incorporating ESG factors into business strategies, not just for ethical and compliance reasons but as a catalyst for financial performance. This research adds to the emerging literature on ESG investing in emerging markets and offers useful guidance for policymakers, investors, and business managers seeking to create sustainable economic growth in India.
1187- 1202
© Airo Journals 2021
