Does ESG Impact the Financial Well-Being of Companies?

The primary aim of this chapter is to investigate the influence of ESG factors on the financial well-being of Indian companies. Research utilizes a sample of 352 Indian firms that are consistently included in the Thomson Reuters Asset 4 ESG database. To assess the impact of ESG on firm profitability, an empirical multivariate panel data model is developed. The study endeavors to determine if firms with high sustainability rankings outperform their low-ranked counterparts, a comparison made through the application of parametric t-tests. The investigation uncovers a statistically significant positive correlation between ESG factors and a firm's financial well-being, as measured by indicators such as return on invested capital, return on equity, return on assets, and earnings per share. Empirical data indicates that firms implementing robust sustainable development strategies tend to exhibit higher profitability and maintain lower levels of leverage.

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