ESG Integration and Firm Performance : Evidence from Select Sectors in India
Authors
-
Vandana Gupta
Professor – Finance & Accounting (Corresponding Author), FORE School of Management, B-18, Qutub Institutional Area, Adhitam Kendra, Delhi - 110 016
https://orcid.org/0000-0002-1723-1951
DOI:
https://doi.org/10.17010/pijom/2026/v19i9/175111Keywords:
environmental, social, and governance factors; textual analysis; investment decisions; firm performance; panel data; carbon-intensive sectors.JEL Classification Codes : G11, G32, Q56
Publishing Chronology: Paper Submission Date : October 20, 2025 ; Paper sent back for Revision : July 15, 2026 ; Paper Acceptance Date : August 20, 2026 ; Paper Published Online : September 15, 2026.
Abstract
Purpose : The study examined the extent to which environmental, social, and governance considerations influenced the investment decisions of finance professionals in India and assessed whether these considerations were associated with the financial performance of listed firms.
Design/Methodology/Approach : A structured questionnaire was administered to finance professionals, and their open-ended responses were analyzed using textual and word-frequency analysis. In addition, panel data for 55 publicly traded Indian firms across select sectors over 2019–2024 were analyzed using panel regression models, with firm performance proxied by return on equity, return on assets, and Tobin's Q, controlling for leverage, firm size, firm age, liquidity, and working capital cycle. A fixed- or random-effects specification was selected separately for each outcome using the Hausman test.
Findings : Governance considerations received greater emphasis from respondents than environmental and social considerations. The panel results did not support a uniform positive relationship between sustainability scores and firm performance. The score was negatively associated with return on equity in the preferred random-effects model, but was statistically insignificant for return on assets in the preferred fixed-effects model and for Tobin’s Q.
Practical Implications : The results suggested that investors, lenders, managers, and regulators should evaluate sustainability information jointly with financial fundamentals rather than treating a higher sustainability score as an automatic indicator of superior short-term performance.
Originality/Value : The study combined perceptual survey evidence from finance professionals with firm-level empirical evidence on the ESG–performance relationship, offering a more nuanced picture than the predominantly positive associations reported in prior literature.
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References
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