2025, Vol. 6, Issue 2, Part H
Role of ESG in corporate financial performance: A sectoral analysis
Author(s): Tripti and R Sarvamangala
Abstract: In recent years, Environmental, Social, and Governance (ESG) factors have gained considerable attention as critical indicators of sustainable and responsible business practices. This study explores the role of ESG in influencing corporate financial performance (CFP) across various sectors, with a particular focus on identifying sectoral variations in ESG impact. While traditional financial metrics have long been the benchmark for corporate success, the growing emphasis on non-financial indicators necessitates a deeper understanding of how ESG performance correlates with financial outcomes. The research adopts a quantitative methodology, analyzing ESG scores and financial data (including return on assets, return on equity, and stock price performance) of firms from diverse industries such as manufacturing, IT, pharmaceuticals, and financial services. The analysis reveals that sectors with high environmental exposure and regulatory scrutiny, such as energy and manufacturing, show a stronger positive relationship between ESG practices and financial performance. In contrast, sectors like IT and services exhibit a moderate but significant impact, primarily through social and governance dimensions. The study also highlights how proactive ESG strategies can mitigate risk, enhance brand reputation, and improve investor confidence, ultimately leading to long-term financial gains. The findings suggest that ESG integration should be tailored to sector-specific challenges and opportunities, reinforcing the importance of strategic alignment between sustainability initiatives and financial objectives. This sectoral analysis contributes to the growing literature on ESG and provides valuable insights for policymakers, investors, and corporate leaders seeking to align sustainability with profitability.
Pages: 765-770 | Views: 311 | Downloads: 39
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How to cite this article:
Tripti, R Sarvamangala. Role of ESG in corporate financial performance: A sectoral analysis. Asian J Manage Commerce 2025;6(2):765-770.
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