Chapter-2

REVIEW OF LITERATURE

2.1 Overview
Understanding the theoretical and empirical terrain surrounding the research topic is
mostly dependent on the literature review chapter. It systematically examines existing
scholarship, identifying key themes, methodologies, and findings that have shaped current
knowledge. This analysis extends beyond just emphasize the contributions and gaps within
the literature but also situates the present study within this broader context, justifying its
relevance and guiding its conceptual framework. By synthesizing diverse sources, the
chapter aims to provide a coherent narrative that informs and supports the subsequent
research design and analysis.

Numerous academic works center on the empirical perspective on the consequences of

ESG components. A financial effect and tangible commitment to ESG or sustainable
development are there (Egorova et al., 2021). In the framework of ESG, numerous theories
and concepts have been created over time. The implementation and impact of ESG are
major areas of emphasis for researchers, academicians, and investors. Accordingly, the
UN PRI seeks to support responsible corporate citizenship in the financial sector by
motivating institutional investors to voluntarily help integrate ESG principles into
investment strategies and decision-making (The UN PRI and the OECD Guidelines For
Multinational Enterprises: Complementarities And Distinctive Contributions, N.D.). The
business sector is putting the fundamentals of ESG into practice due to increased attention
this agenda is receiving on a worldwide scale, which affects their financial performance.

2.2 Methodology of Literature Review

The methodology used for the literature review is a thorough process that produces in-
depth understanding of the field of study. to assess and examine India's heavy industries'
performance study. The survey's objectives, for which the methodology was chosen, are
as shown below:

Collection of Literature: The articles and Research papers published in the field of ESG
and Corporate Financial Performance were gathered from affiliated databases. The

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 18

following boundaries were established to filter the literature that was accessible because
there was diverse range of material regarding the subject of the current study.

 Only articles published in "peer-reviewed journals" were included.

 Included were articles that aligned with the current research.

Literature classification: The selected research articles were examined based on their
publication year, methodology, country of sample selection, and sector of study to make
progress of a logical understanding of "trends in the literature related to the Impact of ESG
on the Performance of firms and corporates."

2.3 Literature Review

(Veeravel et al., 2024) in their article “Does ESG disclosure really influence the firm
performance? Evidence from India” investigates how the performance of enterprises listed
on the National Stock Exchange (NSE) is affected by ESG disclosure scores. From 2010
to 2020, 167 sample firms are utilized in the study. They capitalize the entire ESG
disclosure ratings are used to assess how sustainability disclosure affects business
performance. As further measures of the company's performance, they consider Tobin's Q,
the price-earnings ratio (P/E ratio), ROE, and ROA. Regression analysis on dynamic panel
data is employed in the study to look into how ESG disclosures affect a company's
performance. The Generalized Method of Moments (GMM) model was employed by
researchers to overcome endogeneity issues. The results of the study show a favorable
correlation between corporate success and ESG disclosure. It implies that there should be
greater emphasis on sustainability disclosures to help firms perform better.

(Siregar et al., 2024) in their research titled “Sustainability practices and firm performance:
The association between sustainability practices and business success was examined,
along with moderating influence of industry, firm, and national-level factors. The study
focused on the moderating role of these factors at the firm, industry, and country levels.
The study's samples consist of listed firms in ASEAN 5 (Indonesia, Singapore, Malaysia,
Thailand, and the Philippines), with a total of 1069 observations spanning from 2004 to
2019. The method they employ to test their theories is regression analysis. The fact that
sustainability performance and business performance have a notable positive link lends
credence to their prediction. However, there are no discernible differences between the

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 19

financial results of businesses who release independent sustainability reports and those
that don't. There was no appreciable moderating effect of firm, industry, or country-level
variables on the connection between business performance and sustainable practices.
There are presently no studies that analyze the relationship between sustainable practices
and firm success at the company, industry, and national levels at the same time.
Sustainability practises are expected to be more in demand in ASEAN than in developed
markets because of the region's growing social concerns and environmental concerns.

(Makridou et al., 2024) researched “Relationship between ESG and corporate financial
performance in the energy sector: empirical evidence from European companies” This
study investigates the influence of ESG on the profitability of energy firms through ROA.
It does this by examining the different ESG dimensions and the total score. A panel data
sample of 911 firm-year observations for 85 European energy-sector enterprises between
1995 and 2020 is investigated. To explore the impact of ESG components on the CFP of
EU energy businesses, two different modeling specifications were used. In July 2021, the
financial information and ESG ratings were acquired from the Thomson Reuters Eikon
database. The empirical findings demonstrated that energy businesses' profitability was
somewhat impacted negatively by their ESG execution. Further, an independent
evaluation of ESG subcomponents showed that environmental responsibility had a notably
negative influence. Conversely, the company's CFP and its responsibilities for corporate
social responsibility and governance are positively but not substantially associated.

(Del Gesso & Lodhi, 2024) The theories underlying ESG disclosure were examined in the
paper "Theories underlying ESG disclosure: a systematic review of accounting studies,"
which shed knowledge on the prevalent theoretical approaches and new perspectives that
support this kind of disclosure. Out of the thirty-two theories that were found, the study
reveals that five primary theories stand out: stakeholder theory, institutional, legitimation,
agency, and signaling theories. To provide a comprehensive theoretical framework,
theories are often combined. The data also show a range of minor variables, many of which
are new, that offer fresh angles on ESG disclosure studies. These factors include reputation
theories, upper echelons, stakeholder salience, and cognitive cost, among others.

(Treepongkaruna & Suttipun, 2024) The purpose of the study, "The impact of
Environmental, Social, and Governance (ESG) reporting on corporate profitability:

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 20

evidence from Thailand," was to investigate how listed firms in Thailand fared financially
from 2019 to 2021 as a result of ESG reporting. ROE and ROA were used to measure
corporate profitability, while the content analysis was used to quantify ESG reporting
(within 11 topics) using 147 listed firms of ESG alliance. The study's data was examined
using panel regression, descriptive analysis, and correlation matrices. The researchers
discovered a statistically significant and favorable effect of ESG reporting on corporate
profitability in Thailand, which is consistent with the legitimacy, stakeholder and signaling
hypotheses.

(Xu & Zhu, 2024) Analyzes how CFP is impacted by ESG in their study "The Effect of
Environmental, Social, and Governance (ESG) Performance on Corporate Financial
Performance in China: Based on the Perspective of Innovation and Financial Constraints,"
The writers add to our understanding of the fundamental process that underlies the alliance
between ESG and financial performance in rising countries. With the help of a data sample
of A-share listed businesses in Shanghai and Shenzhen, China, This study investigates the
relationship and internal workings among the two in conjunction with relevant basic
theories from 2009 to 2021. It accomplishes this by applying a fixed time and industry
research approach with a two-way fixed effects model. The study's findings demonstrate
that ESG performance positively affects CFP by promoting corporate innovation. Long-
term ESG success may be positively associated with CFP for corporations. The give-away
of performance of ESG to improving CFP decreases when businesses encounter financial
difficulties. ESG performance adds more to non-state-owned companies' (non-SOEs) CFP,
according to heterogeneity analysis. In non-SOEs, the moderating negative effect of
financial limitations is more noticeable. ESG performance also encourages CFP
improvement in non-heavy polluting corporates. The scientific basis for corporates' ability
to enhance CFP and boost market competitiveness is expanded by this study.

(Maji & Lohia, 2023) in the study "Environmental, Social and Governance (ESG)
Performance and Firm Performance in India" looked into how certain Indian companies'
firm performance was affected by their ESG performance. This study employs a cross-
sectional design and utilizes secondary data, using 222 Indian enterprises as a sample.
Financial statistics are obtained from the ACE Equity database, while the ESG
performance of Indian companies is determined by the ESG score provided by Credit

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 21

Rating Information Services of India Limited (CRISIL). There are two forms of firm
performance measurements used: market-based and accounting-based. Empirical research
employs simultaneous quantile regression models and ordinary least squares. According
to the report, Indian businesses place far greater emphasis on social and governance factors
than environmental ones. According to the findings, there is favorable correlation between
company performance and ESG performance and its basic pieces. The findings of quantile
regression indicate that the positive impact of ESG is more prominent at the top quantiles
and that the impact varies depending on where in the conditional distribution of company
performance one looks.

(Ahmad et al., 2023) The article "Environmental-, social-, and governance-related factors
for business investment and sustainability: a scientometric review of global trends"
reviews the factors that influence decisions of business regarding ESG policy: pollution
and trash, performance economically, sustainability of environmental aspects, CSR,
gender, and governance structure. According to the research, businesses' both
effectiveness and sustainability can be enhanced by disclosures of ESG. During COVID-
19, It was observed that ESG investments have a considerable potential for diversification.
Implementing a policy of ESG improves a company's ability to innovate, its ability to
create value, and its financial success.

(Su et al., 2023) in the paper titled “The Impact of Environmental Information Disclosure
on the Efficiency of Enterprise Capital Allocation” employs econometric modeling and
data from Chinese A-shares' highly polluting businesses from 2013 to 2020 to investigate
the mechanisms underlying the effect of environmental information disclosure on capital
allocation efficiency. It is discovered that the efficiency of capital allocation is greatly and
robustly improved by environmental information disclosure; the impact varies depending
on the size, ownership, life cycle, and location of the organization. However, it is
discovered that creditors and employees play a detrimental moderating function in this
effect.

(Poyser & Daugaard, 2023) through literature review in the article “Indigenous sustainable
finance as a research field: A systematic literature review on indigenising ESG,
sustainability and indigenous community practices” build the case for Indigenous
Sustainable Finance (ISF) as a separate disciplinary subject by providing a framework for

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 22

conceptualizing and characterizing the varied positions of literature. In contrast to other
social and management sciences and mainstream sustainable finance, this study makes the
case that ISF is a valid, well-defined topic of inquiry unto itself.

(Chang et al., 2023) in “The impacts of ESG performance and digital finance on corporate
financing efficiency in China” uses Data Envelopment Analysis (DEA) and panel data
analysis to examine interaction among digital finance and performance of ESG on
corporate financing efficiency. According to our empirical findings, corporate financing
efficiency is positively impacted by both digital finance and higher ESG performance at
the 1% significance level. Additionally, the positive marginal effect of ESG performance
on corporate financing efficiency is mitigated by digital finance.

(Mohamed Buallay et al., 2023) The tie ups between the volume of reporting in context to
sustainability and the operational, financial, and market results of banks and financial
services is examined in "Sustainability reporting in banking and financial services sector:
a regional analysis" across seven distinct regions (Asia, Europe, Mena, Africa, North and
South America). The study looks the impact of the ESG score and the three pillars on
banks' performance (ROA, ROE, and Tobin's Q (TQ)) using data gathered from 4458
observations from 60 different countries over a ten-year period (2008–2017). We
additionally account for governance, macroeconomic, and bank-specific factors. The
findings show a negative link between market performance (TQ), financial performance
(ROE), and operational performance (ROA) and ESG. The performance is impacted
differently from the regional and pillar viewpoints as well as the ESG, pillar, and region
perspectives. This paper is innovative since it incorporates several political and economic
aspects. The findings have important theoretical ramifications for international scholars
and policy makers. The weak link between the performance of banks and financial services
and ESG factors is one way that the management shortcomings of the banking and
financial services industries are evident.

(Rahi et al., 2022) Does the use of sustainable practices impact financial performance?
The impact of sustainability policies on the FP of the Nordic banking industry was
examined in "Evidence from the Nordic Financial Industry." For 39 financial organizations
in the Nordic region (Sweden, Denmark, Finland, and Norway), the study contains a
sample selection of observations for a total of 152 firm-years for the business years

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 23

including 2015–2019. In July 2020, information on FP and ESG indicators was taken from
the Thomson Reuters Eikon database. This is a quantitative research that utilizes the
generalized method of moments and regression. The authors discovered both beneficial
and negative effects of sustainable practices on FP using static and dynamic estimators.
The authors found a negative correlation between FP (earnings per share, return on
invested capital, and return on equity) and ESG practices. The authors found a favorable
correlation between return on assets and governance.

(Saygili et al., 2022) The aim of the paper "ESG practices and corporate financial
performance: Evidence from Borsa Istanbul" is to find out the impact of CFP indicators at
Turkish listed businesses on ESG practices. Using the GRI environmental scores and the
Capital Markets Board's corporate governance principles, the impact of ESG disclosures
on the firm-level CFP of listed companies on the Borsa Istanbul Corporate Governance
Index (XKURY) from 2007 to 2017 is examined. This study makes a contribution since it
investigates how twenty separate ESG variables—including company disclosures—affect
CFP in an arising market. The study's results show that ED have a detrimental impact on
CFP. In the social dimension of ESG, operational efficiency is enhanced by stakeholder
involvement in management. CFP benefits from provisions pertaining to the board of
directors and shareholder rights in terms of governance.

(Chen & Xie, 2022) The study "ESG disclosure and financial performance: The
moderating role of ESG investors" explores how business financial performance is
impacted by ESG disclosure. The endogeneity issue is resolved in the study by using the
staggered difference-in-differences technique on sample of non-financial listed companies
from 2000 to 2020. Studies show how companies' financial performance is enhanced by
ESG disclosure. This conclusion is still supported by a number of robustness tests,
including the Goodman-Bacon decomposition, replacement of dependent variables,
system GMM estimate, placebo test, parallel trend test, and so forth. Diverse factors
influence how ESG disclosure affects financial performance. Companies that have more
media attention, a longer history, high agency expenses, and ESG investors all report a
further advancement in their corporate financial performance as a outcome of ESG
disclosure. Additionally, the alliance between ESG disclosure and monetary success is
significantly moderated by investors who have an ESG preference. From the extended

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 24

analysis, we derive two conclusions. The first is that ESG investors are drawn to ESG
disclosure.

(Berg et al., 2022) The paper "Aggregate Confusion: The Divergence of ESG Ratings"
examines how ESG ratings differ using information from six well-known ESG rating
agencies: MSCI, Sustainalytics, Kinder, Lydenberg and Domini (KLD), Moody's ESG
(Vigeo-Eiris), S&P Global (RobecoSAM), Refinitiv (Asset4), and Moody's ESG (Vigeo-
Eiris). We map the various approaches onto a common taxonomy of categories and record
the rating deviation. We break down the divergence into contributions of weight,
measurement, and scope using this taxonomy. 56% of the variation is attributed to
measurement, 38% to scope, and 6% to weight. By looking more closely at the causes of
measurement divergence, we find evidence of a rater effect, in which a rater's perception
of a company as a whole affects how certain categories are measured. The findings demand
a closer look at the information used to make ESG ratings.

(El-Chaarani et al., 2022) to bring out the effects of internal and external corporate
governance mechanisms on the FP of banks in the understudied Middle Eastern and North
African (MENA) region during the COVID-19 pandemic period, see the article "The
Impact of Corporate Governance on the Financial Performance of the Banking Sector in
the MENA (Middle Eastern and North African) Region: An Immunity Test of Banks for
COVID-19." Both financial and non-financial data on the banking industry were gathered
via World Bank publications, bank annual reports, and the Orbis Bank Focus database.
Fixed effects regressions and two-stage least squares were then applied. The inclusion of
independent members on the board of directors, a high concentration of ownership, and
the absence of political pressure on board members were shown to be effective corporate
governance practices. During the crisis, corporate governance practices like anti-takeover
safeguards, women on boards, performance-based compensation, and moderate board size
had no discernible effect on bank performance. In times of pandemics and crises, the
financial performance of banks in the Middle East and North Africa (MENA) could be
enhanced by an efficient system of internal and external corporate governance.

(Ningthoujam et al., 2022) study's focus is on ESG investment in India, and it covers a
range of topics, including ESG funds, ESG scores, and investment scenarios. One of our
study's goals is to examine the Nifty100 ESG and Nifty100's performance. ii) to examine

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 25

the correlation between the return on the Nifty 100 stocks and their ESG ratings. In this
study, we made use of an index chart and simple regression analysis. Since 2013, the Nifty
ESG100 index has outperformed the Nifty 100 index. The Nifty ESG index recovers from
the COVID-19 epidemic more quickly than the Nifty 100 index. Furthermore, there is no
discernible correlation between the Nifty 100 stocks' current yield and ESG score. The
Nifty 100 stocks' current yield and ESG score have a negative correlation with one another.
There is a great deal of need for more research on this subject because merged investing
strategies are being adopted globally.

(Kumar et al., 2022) Using big data analytics and machine learning of academic research,
this study reviews the literature on sustainable finance. Thus, this research looks at the
most important papers and the leading journals, authors, institutions, and nations that have
contributed, as well as the study settings and methodological decisions made for studies
on sustainable finance. Furthermore, This research offers insights regarding seven key
areas of sustainable finance research: impact investing, climate finance, green finance,
socially responsible investing, energy financing, carbon financing, and governance of
sustainable finance and investing.

(Coulmont et al., 2022) in the study study “Sustainability performance indicator trends: a
Canadian industry-based analysis” seeks to investigate trends in the sustainability
performance indicators that Canadian businesses report on in their sustainability reports.
Our observations span a 19-year period, and our sample consists of eight enterprises across
four sectors. Our findings show that the number of publicly available sustainability
performance indicators has expanded over time, and that the three dimensions of
sustainability have been covered to varying degrees. Prioritizing environmental
performance all during the early 2000s has given way to a greater emphasis on social
performance metrics, including human rights and employment standards. Furthermore,
about the number of sustainability performance indicators made public has gradually risen
over time, and the three dimensions of sustainability have been covered to varying degrees.
The range of sustainability performance metrics included in sustainability reports peaked.

(Duque-Grisales & Aguilera-Caracuel, 2021) in the research titled “Environmental, Social

and Governance (ESG) Scores and Financial Performance of Multilatinas: Moderating
Effects of Geographic International Diversification and Financial Slack” examines the

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 26

connection between improved ESG scores and a company's Financial Performance (FP)
in the expanding markets of Latin American multinationals. The study closes the current
knowledge gap by examining data on 104 multinational businesses from Chile, Brazil,
Mexico, Colombia and Peru between 2011 and 2015 using linear regressions and a data
panel chosen from the Thomson Reuters EikonTM database. The results show that the
ESG score and FP have a statistically significant negative correlation. Furthermore, when
the ESG variables are looked at separately, the results demonstrate a negative connection
between each component and the FP of multilatinas. Finally, the empirical analysis
demonstrates that financial slack and geographic international diversification attenuate the
relationship between ESG features and firms' FP. This study helps us better understand the
relation between FP and ESG characteristics in the background of Latin American
enterprises.

(Chouaibi et al., 2021) in their article the study "Exploring the Moderating Role of Social
and Ethical Practices in the Relationship between Environmental Disclosure and Financial
Performance: Evidence from ESG Companies" looks at how social and ethical behaviors
may be able to moderate the association between Environmental Disclosure (ED) and (FP)
of businesses included in the ESG index. An analysis is conducted that includes a linear
regression using panel data from the Thomson Reuters and Bloomberg databases. Panel
data for the study came from a sample of 523 companies that were listed on the stock
exchanges in West Europe and North America. The findings show that Environmental
Disclosure (ED) and Financial Performance (FP) have a substantial and favorable
association. According to this, financial performance is positively impacted by strong
environmental disclosures while it is lowered by weak ones. Furthermore, the study shows
that social and ethical principles moderate the association between environmental
disclosure and the company's financial performance.

(Gillan et al., 2021) Examine the research on CSR and ESG that is based in financial
economics, with an emphasis on corporate finance. We focus on the most explored and
debated subjects during the process. The market, ownership, and leadership traits of a firm,
together with its risk, value, and performance, have all been shown to be strongly
connected with its ESG/CSR record and actions.

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 27

(Osadume & Okene, 2021) in the paper "Financial Sector Sustainability and Performance
- Policy Imperative for the Monetary Authorities" to ascertain if there was a relationship
between Nigeria's financial sector performance and sustainability and to suggest suitable
policy paths. The study, which covered the years 2010 to 2019, used four significant
Nigerian banks as its sample: Zenith Bank, Guaranty Bank, United Bank for Africa, and
First Bank of Nigeria. At the 5% level of significance, secondary panel data were gathered
from the banks' official financial filings. and submitted to panel unit root tests, descriptive
statistics, panel least square, and co-integration statistical procedures. The results showed
that, although being inconsequential over the long term, the exogenous variables (SUST)
had a significant short-term impact on the endogenous variables (ROA, ROE).

(Muhmad & Muhamad, 2021) Identifying the patterns and problems noted in earlier
research about the relationship between these two variables, the study "Sustainable
business practices and financial performance during pre- and post-SDG adoption periods:
a systematic review" examined this relationship. Content analysis was used in this
investigation to look at the literature, which included 56 publications altogether that were
indexed in Scopus and Web of Science (WoS). A good correlation between organizations'
financial success and sustainable policies was noted in around 96% of the articles.

(Gillan et al., 2021) The financial economics-based research on ESG and CSR with a focus
on corporate finance is reviewed in the article "Firms and social responsibility: A review
of ESG and CSR research in corporate finance." We concentrate on the most discussed
and studied topics as a result. While a company's market, owner, and leadership traits, and
its risk, performance, and value, are all correlated strongly with the company's ESG/CSR
profile and activities, our research reveals conflicting hypotheses and unresolved results
that raise further questions.

(Egorova et al., 2021) The impact of ESG aspects on Information Technology (IT)
company performance is examined in the article "The Impact of ESG Factors on the
Performance of Information Technology Companies." The research looks at how IT
businesses stack up against other industries regarding ESG ratings and identifies the main
advantages and disadvantages of each category. It is demonstrated that IT firms are not the
leaders in ESG ratings at the moment, which leads to the conclusion that IT organizations

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 28

have the chance to advance their ESG practices if doing so will strengthen their position
in the market and boost their performance.

(Yilmaz, 2021) Using data from around the world, the article "Sustainability and Financial
Performance Relationship: International Evidence" investigates the connection between
corporate sustainability and business financial performance. For the five-year period
between 2014 and 2018, non-financial enterprises from the five BRICS rising economies
are included in the sample. The analysis makes use of financial information from corporate
reports as well as the ESG scores from the Sustainalytics database. Models of panel
regression are created to determine the link. The article's findings demonstrated a
statistically substantial positive association exists between financial performance and
sustainability performance. The combined environmental, social, and governance scores
have yielded minor outcomes, however the overall ESG score has produced substantial
results; this suggests that the components of the total ESG score work together to exert an
influence the financial performance.

(Cankaya & Sisman, 2020) to look at the effects on businesses' performance financially of
the ESG scores produced for airlines did the regression analysis in the article “Effect of
ESG data on the financial performance of companies: a study on the airline sector”, the
resluts of which indicated that while investors in the aviation sector disregard the ESG
scores of firms, the ESG scores calculated for companies in the airline industry do not
affect the financial execution of enterprises.

(Jha & Rangarajan, 2020) The study's authors looked into the connection between
Corporate Firm Performance (CFP) and Corporate Sustainability Performance (CSP) for
a sample of the top 500 Indian companies from 2008 to 2018. "Analysis of corporate
sustainability performance and corporate financial performance causal linkage in the
Indian context" At the aggregate and disaggregate levels of ESG performance, CSP
variables have been taken into account. Both accounting-based and market-based metrics
have been used to assess CFP. The Granger causality test and multiple regression for panel
data have been employed. in conjunction with rigorous statistical approaches to assess the
bidirectional causation and intensity of the CSP-CFP relationship. A trend analysis at the
sectoral level is offered, segmenting the companies in different industries and categorizing
them into ESI and non-ESI sectors. The findings indicate that there isn't a causal

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 29

connection between the CSP and CFP variables in either direction and that, overall, the
CSP-CFP relationship is not very important for Indian enterprises. There is some evidence
of a negative correlation between CSP and CFP on an individual basis. The CSP-CFP
correlation is negatively impacted by this relationship in both scenarios, which suggests
that investments made for sustainability do not improve the financial success of Indian
enterprises. According to our findings, which show largely inconsequential results for this
relationship, companies will perform similarly in terms of CFP whether their CSP is higher
or lower on ESG dimensions.

(B. A. Alareeni & Hamdan, 2020) The goal of the article "ESG impact on performance of
US S&P 500-listed firms" is to know whether there is any positive, negative, or even
neutral relationships between a company's operational (ROA), financial (ROE), and
market performance (Tobin's Q) and its corporate disclosure of ESG. The US S&P 500-
listed companies from 2009 to 2018 are included in the study sample. To investigate the
study hypotheses and accomplish the study objectives, panel regression analysis was
employed. The findings demonstrated that a company's performance metrics are positively
impacted by ESG disclosure. Nevertheless, a second measurement of the ESG sub-
components revealed a negative correlation between ROA and ROE and the disclosure of
environmental (EVN) and Corporate Social Responsibility (CSR) information. Tobin's Q
is positively correlated with EVN and CSR disclosure. Furthermore, there is a favorable
association between Corporate Governance (CG) disclosure and Tobin's Q, additionally a
negative correlation with ROE. More significantly, companies with high asset values and
high levels of financial leverage typically have higher ESG, CSR, EVN, and CG.
Moreover, ROA and ROE increase with increased ESG, EVN, CSR, and CG disclosure
levels.

(Max Schanzenbach et al., 2020) This article clears up any doubt by outlining the
acceptable times and methods for trustees and investment fiduciaries to participate in ESG
investing. We discuss four connected points: The present study objectives to offer a clear
taxonomy on the implying of ESG investing. Specifically, they distinguish between two
types of ESG investing: risk-return ESG, which involves using ESG factors to improve
risk-adjusted returns, and collateral benefits ESG, which involves using ESG factors for
third-party effects. Additionally, we address the subjectivity that arises from the

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 30

identification and application of ESG factors, making the assessment of ESG investing
strategies more complex. Finally, we summarize the existing literature on the subjectivity
of ESG investing and find that the results are inconsistent and contextual.; and (4) We
demonstrate that while collateral benefits ESG is generally forbidden under American trust
fiduciary rules, risk-return ESG may be allowed provided it is backed by a well-reasoned,
regularly updated study.

The findings and conclusions of the study conducted by (Cornell, 2020) showed that
concerns over ecological and social issues have led the corporate objective such as
shareholders' wealth maximization outdated. Information regarding company's operation
that impacts the environment should be disclosed by the company and such disclosure
should potentially benefit to all stakeholders like shareholders, regulators, governments
etc. However, deciding what to disclose and how to disclose is a bit conundrum.

The results of the study conducted by (Angelo Drei, 2019) reflect that ESG investing is
the investment feelings of what investor believe in world should like. ESG investment
strategies shows in multiple ways means separately present in the world. Financial gain is
not anytime the expected result of ESG investment.

(Abughniem et al., 2019) The effect of sustainability reporting on business performance is

examined in the paper "Corporate sustainability as an antecedent to the financial
performance: An empirical study." 186 companies from the Amman Stock Exchange were
included in the sample between 2014 and 2017. The study uses Tobin's Q and ROA to
measure company performance to accomplish this goal. The study brings out a substantial
relationship between performance and sustainability reporting using panel random-effect
regression. All things considered, the findings of our study demonstrate the strong and
detrimental effects of environmental duty, human resource accountability, and size on
return on asset. While SR has a notably good impact on Tobin's Q, environmental
responsibility and human resource responsibility both have a large positive impact. More
precisely, scale, human resource responsibility, and environmental responsibility are
driving down return on asset in the industrial sector; size and social responsibility are
having a negative impact on Tobin's Q in the financial sector. Furthermore, as evidenced
by the size of the chosen organizations, the financial and service sectors are performing
worse monetary terms of ROA and Tobin's Q.

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 31

The results of the study conducted by (Alessandrini & Jodeau, 2019) showed that the ESG
setup of 2 passive portfolios and smart beta portfolios can be greatly improved in lack of
deducting risk-adjusted returns. In this, they also show reputed intelligent beta approaches
could be useful from an ESG conceal over the period. Even with hostile deduction, the
specific factors remain in same. We show few deduction in the vulnerability to the specific
factor, but it shows to be repay by a rise in the ESG profile of the portfolio. In this paper
main focus on ESG profile of passive investment and smart beta strategies could be
improved without performance holds.

(Landi & Sciarelli, 2019) The authors argue that the ESG paradigm which aims to rate
corporate social performance may affect the remarkable returns of The Financial Times
Stock Exchange Milano Indice di Borsa (FTSE MIB) Index listed Italian firms. The
authors did a panel data study using a Fixed Effects Model to confirm the alliance between
an ESG Rating and an anomalous return on a company. They used the Fama-French
technique to measure abnormal returns, and for every company they looked into, they ran
an annual Jensen's Performance Index. The empirical findings indicate that managers in
Italy have become more interested in sustainability and CSR during the past ten years, and
the caliber of ESG assessments has improved as a result of credible corporate disclosure.
Therefore, even though investors have been using ESG factors in their stock selection
processes, the authors discovered that doing socially responsible investing (SRI) had a
statistically significant negative influence on market premium.

The results of the study conducted by (Angelo Drei, 2019) reflect that ESG investing is
the investment feelings of what investor believe in world should like. ESG investment
strategies shows in multiple ways means separately present in the world. Financial gain is
not anytime the expected result of ESG investment.

(Stolowy & Paugam, 2018) in the study The goal of "The expansion of non-financial
reporting: an exploratory study" is to determine the definition and recent evolution of Non-
Financial Reporting (NFR). We start by looking at the variations in definitions and modern
NFR methods. We discover a deficiency in convergence between leading sustainable
enterprises and regulators/standard-setters. Second, we look at how the amount and kind
of NFR that businesses reported changing between 2006 and 2016. Consideration was
given to a sample of South African businesses. We show that the amount of NFR increased

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 32

significantly, especially between 2006 and 2011. New disclosures about the environment,
human capital, performance, and strategy seem to be the driving forces behind this shift.

(Maqbool & Zameer, 2018) The study looks at the connection between CSR and financial
performance in the Indian environment. "Corporate Social Responsibility and Financial
Performance: An Empirical Analysis of Indian Banks." Over a ten-year period (2007–16),
secondary data for 28 Indian commercial banks listed on the Bombay Stock Exchange
(BSE) has been gathered. The findings show that CSR has a favorable effect on Indian
banks' financial performance. The study's conclusions offer valuable guidance to
management on how to reconcile Corporate Social Responsibility (CSR) with the strategic
goals of the company and update their business strategy from a profit-driven to a socially
conscious one.

The study's findings conducted by (Bennani, et al., 2018) reflect that impact on
performance of ESG investment. If we talk about 2010-2013, ESG investing seems low as
compare to 2014-2017. In 2014-2017 more beneficial in ESG investing. ESG investment
divided into 2 different ways. First, ESG can be an alternative risk assessment model of
corporate firms. Second, ESG is an investing style, not a risk model. Mainly showed that
how ESG impact on investment flows that can impact asset prices, portfolio Etc

(B. Alareeni, 2018) In order to ascertain if businesses engage in Earnings Management

(EM), the authors of the paper "Does corporate governance influence earnings
management in listed companies in Bahrain Bourse?" looked at data for listed companies
in Bahrain Bourse. Additionally, the impact of several characteristics of corporate
governance on EM practices is investigated. Discretionary Accruals (DA) [calculated
using the Modified Jones (1995) Model] were employed to ascertain the EM level. Twenty
companies listed between 2011 and 2015 made up the study sample. To evaluate the study
hypotheses and accomplish the study objectives, a panel regression model was employed.
Board size and EM have a negative correlation, supporting the idea that a larger board
corresponds to less EM practices. Additionally, there is a positive link between board
independence and EM, showing that the degree of EM practices increases with the quantity
of independent directors. Furthermore, there is a favourable relationship between internal
ownership and EM, indicating that increased internal ownership leads to an increase in
EM practices. There doesn't seem to be any relationship between CEO duality and EM at

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 33

Bahrain Bourse. What's more intriguing is that the results show that businesses use
income-boosting DA to implement EM.

(Stroehle et al., 2018) in "Exploring Social Origins in the Construction of ESG Measures,"
a working paper Title of Working Paper: Examining Social Foundations in the
Development of ESG Measures Examining five cases of eight interconnected ESG data
vendors and rating agencies, we aim to investigate the differences between ESG measures
as a function of (a) data vendors' diverse social origins and (b) their need to establish a
unique profile in a maturing market. In doing so, we demonstrate how each company's
origins its founding principles, legal status, purpose, etc. strongly influence its definition
of materiality and, consequently, how ESG issues are measured and sold. They discover
that data vendors can be classified as either values-based or values-based businesses, and
that the dynamics of market consolidation and the mainstreaming of the use of ESG data
are associated with a change in the kind of investors in the ESG area from values-based to
value-driven.

(Yoon et al., 2018) the study "Does ESG Performance Increase Firm Value? Evidence
from Korea" examines whether CSR at a company contributes significantly to enhancing
its market value in Korea, a rising market. They use corporate governance, social and
environmental (ESG) scores to assess CSR efforts and look into how they affect company
worth. Consistent with earlier research on developed nations, they discover that a
company's market is positively and considerably impacted by its CSR policies.
Nevertheless, depending on the features of the company, its consequence on share prices
may vary. Enterprises in environmentally sensitive industries see less of a value-creating
impact from Corporate Social Responsibility (CSR) than do enterprises outside of these
sectors. More specifically, the firm value of environmentally conscious enterprises is
adversely impacted by corporate governance practices. Additionally, only chaebols'
governance practices significantly increase market value; investors place little importance
on the governance practices of other companies. This result points to the governance
structure reformation's value-enhancing benefits in the former. More specifically, the firm
value of environmentally conscious enterprises is adversely impacted by corporate
governance practices. Additionally, only chaebols' governance practices significantly
increase market value; investors place little importance on the governance practices of

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 34

other companies. This result points to the governance structure reformation's value-
enhancing benefits in the former.

(Velte, 2017) focuses on the overall Environmental, Social, and Governance Performance
(ESGP), breaks it down into its parts, and assesses how each affects financial performance
(FINP). In “Does ESG performance have an impact on financial performance? Evidence
from Germany” The study includes 412 firm-year observations from a sample selection of
businesses listed on the German Prime Standard (DAX30, TecDAX, and MDAX) for the
business years 2010–2014. To assess potential relationships between ESGP as identified
by Thomson Reuters' Asset4 database and accounting and market-based FINP measures
(Return on Assets [ROA] and Tobin's Q), a regression and correlation study was
conducted. While ESGP has no effect on Tobin's Q, it positively affects ROA. In addition,
compared to environmental and social performance, governance performance has the
biggest influence on FINP when examining the three distinct ESGP components.

(Bhatt & Bhatt, 2017) in “Corporate governance and firm performance in Malaysia”
Examine how the execution of Malaysia's listed firms is impacted by the Malaysian Code
on Corporate Governance (MCCG, 2007 and 2012). Businesses with excellent corporate
governance outperform those who have inferior governance, in line with the agency
hypothesis and resource dependency theories. This essay investigates this relationship in
Malaysia, a developing nation with a setting within the institution that is distinct from that
of Western nations. For the study, a sample of 113 Malaysian listed companies was used.
The endogenous relationship between leverage, company performance, and corporate
governance is taken into account in this study. Using a self-developed corporate
governance index (MCGI), the research looks at the link between corporate governance
framework and firm’s performance in Malaysia. As per the authors' findings, governance
as determined by MCGI has a positive and noteworthy relationship with the firm's
performance. Second, compared to MCCG 2007, corporate governance of sample
enterprises significantly improved following MCCG 2012 implementation.

The output of the research conducted by (Gupta & Agrawal, 2017) disclosed that there
will be two sectors are the government and corporations, they both are started taking CSR
as a strategic tool for long-term policies and started to believe only in profit maximization.
CSR is an important function of the Companies Act, 2013. In this article, we show that the

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 35

alliance between financial execution and size with corporate social disclosure and social
spending. Annual report of 64 companies shows that official websites for the fulfilment of
the objectives.

(Starks et al., 2017) within the piece "Investor Horizons and Corporate ESG Profiles"
Institutional investors' preferences for the ESG characteristics of the companies in their
portfolios are a topic of discussion and question. To solve these problems, we examine
portfolio changes and discover that investor horizons have an effect on preferences for
corporate ESG: Longer-term investors typically have a preference for higher-ESG
enterprises, whereas short-term investors have the opposite preference. We find that
investors behave more gently toward high ESG enterprises, selling less following
unfavorable earnings surprises or poor stock returns, which aligns with the significance of
horizon. By employing shifts in the FTSE4Good Index as shocks to companies' ESG
reputations, we further bolster these conclusions.

(Chelawat & Trivedi, 2016) in “The business value of ESG performance: the Indian
context” aims to close this important vacuum in the literature on sustainability in India,
one of the biggest rising market economies. Using panel regression models, it
experimentally investigates how corporate governance (ESG) performance in India affects
a company's financial performance. The study's conclusions show that strong company
ESG performance improves financial performance.

(Carroll, 2016) The author of the paper "Carroll's pyramid of CSR: taking another look"
examines the well-known Carroll's Pyramid of CSR one more time. He first discusses the
widespread application of the framework in this article before providing an overview of
the four-part definitional framework that served as the pyramid's base. Then, he discusses
a few aspects within the model that were not highlighted when it was first released: ethics
permeates the pyramid; there are inherent tensions and trade-offs; it is an integrated,
cohesive whole; It has the framework for sustainable stakeholders.; and it can be used
globally and in a variety of contexts. In closing, the piece casts its gaze into the future.

The result of study organized by (Chelawat & Vardhan, 2016) reflect that business
organizations are moving around the short term goal of profit maximization to long term
goals include ESG. That will be impact on growing ESG factors and can affect their
financial returns. If we shows that improvement then ESG performance has lowered risk
Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 36
and increase FP. In this study mainly focus on the effect of ESG on companies using panel
regression models.

Figure 2.1: Carroll’s pyramid of CSR: (Carroll, 2016)

(Friede et al., 2015) The study "ESG and financial performance: aggregated evidence from
more than 2000 empirical studies" dates back to the early 1970s and looks for a
relationship between CFP and ESG parameters. Since then, over 2000 empirical research
and multiple review papers on this relationship have been published by academics and
investors. Findings are hard to generalize because the greatest prior review study only
included a small portion of the major papers that are now available. As an outcome,
information about how ESG standards affect finances is still scattered. This study uses all
of the primary and secondary data from earlier academic review studies to address this
problem. By doing this, the study synthesizes the results of nearly 2200 separate
investigations. Because of this, this study provides a comprehensive summary of academic
writing on the subject and makes generalizable claims. The findings demonstrate the solid
empirical base of the business case for ESG investing. About 90% of research found that
the ESG–CFP relationship is nonnegative. More significantly, the vast majority of research
reveal positive results. We point out that the beneficial influence of ESG on CFP seems to
be consistent throughout time. When distinguishing between portfolio and nonportfolio

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 37

research, geographical areas, and nascent asset classes for ESG investment, like corporate
bonds, green real estate, and emerging markets, promising outcomes are achieved.

The outcome of the study organized by (Goyal & Aggarwal, 2014) reflect that ESG stocks
portfolio well performed the blue chip stocks portfolios and the market portfolio in Indian
market, by using risk adjusted measures. When we used absolute rate of return then result
will come like ESG stocks portfolio generated higher return than the blue chip and market
portfolio. So final conclusion will be if ESG stock portfolio found well then give higher
returns as compared to market portfolio

Studies focusing on environmental practices, such as those by (Cheng et al., 2014),

highlight that firms with strong environmental policies tend to exhibit better financial
performance. These companies often benefit from operational efficiencies, reduced
regulatory risks, and improved brand reputation.

(Krueger, 2013) "Corporate Goodness and Shareholder Wealth" investigates how stock
markets respond to events related to a company's corporate social responsibility (CSR),
both positively and negatively, using a special data set. It demonstrates how investors react
adversely to positive events with a weaker negative reaction to positive ones.
Subsequently, It indicates that positive CSR news about companies with a history of
negative stakeholder relations, or "offsetting CSR," is highly valued by investors.
Investors, on the other hand, react adversely to good CSR news, which is more likely to
be the consequence of agency issues. Finally, it demonstrates that when CSR news has
more comprehensive legal and economic information, investor response is stronger.

(Royal & O’Donnell, 2013) in the article “ESG: From Negative Screening to Human
Capital Analysis” A fifth-generation approach is proposed, which incorporates important
intangibles like human capital analysis into the ESG investment process. This paper does
a literature analysis and uses qualitative research and case studies to analyze regulators'
current and potential involvement in regulating unconventional value measurements.
Institutional investors' power is currently based on incomplete information from listed
companies about how they create value, but it is dependent on superior knowledge and
insight into the workings of the companies in which they invest, and it is only as strong as
the quality of the information it uses to make investment decisions on behalf of clients.

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 38

(Siew et al., 2013) the motive of the study, "The relationship between sustainability
practices and financial performance of construction companies," was to investigate how
are these sorts of reports affected the bottom line of construction firms. The first part of
this paper looks at how publicly listed building businesses report non-financial information
about issues like changes in climate, management of the environment, environmental
efficiency, health and safety, human capital, behaviour, stakeholder engagement,
governance, and other issues that institutional investors find important. Subsequently, the
outcome of the empirical investigation about the influence of releasing non-financial
reports and the degree of sustainability practices (as shown by ESG scores) on the FP of
the companies are presented. Numerous financial ratios are used to assess financial
success. The study states that, while there is no substantial relationship between financial
performance and ESG scores, the majority of publicly traded construction companies have
poor levels of reporting. Furthermore, construction firms that publish non-financial reports
beat those that do not in a number of key financial ratios.

(Ioannou and Serafeim, 2012) investigated the connnection between ESG performance and
corporate innovation. Their data indicate that corporations with strong ESG practices are
more innovative, leading to better financial performance through new product
development and market expansion.

Back in 2011 (Dhaliwal et al. 2011) explored the impact of CSR disclosure on financial
transparency and performance. Their findings indicated that voluntary disclosure of CSR
activities is associated with lower cost of equity and improved financial performance, as
it enhances transparency and reduces information asymmetry

(Jemel-Fornetty et al., 2011) To better understand how these novel endeavors advance
conventional investment methods and incorporate ESG data into investee businesses' long-
term shareholder value, the article "Changing the dominant convention: The role of
emerging initiatives in mainstreaming ESG" used an analytical framework to reveal that
actors have implemented many measures to encourage the incorporation of ESG concerns.
To incorporate ESG information into the prevailing communal belief, three institutional
mechanisms coercive, mimetic, and normative must be promoted and reinforced. It is
difficult to predict at this moment if these efforts will be successful in altering the general
consensus regarding stock valuation and investing practices.

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 39

(Jayathilake & Authour, n.d.) The different facets of green finance, the bank's involvement
in it, and its effects on corporate governance in the banking industry are covered in the
article "Impact of Green Financing for the Corporate Governance in the Banking Industry."
According to critical study, green money and sustainable development goals are tightly
related.

(Horváthová, 2010) in the paper titled “Does environmental performance affect financial
performance? A meta-analysis” Investigate the variability in the relationship between
financial and environmental performance by doing an empirical meta-regression analysis
on 64 findings from 37 empirical studies to identify the underlying variables that may
affect the observed variation in the empirical results. The findings imply that the nexus is
affected by the empirical method employed, and that employing basic correlation
coefficients rather than more sophisticated econometric research greatly raises the
probability of discovering A negative correlation between environmental and FP. The
findings also suggest that most portfolio studies find a negative association between
financial success and environmental factors. This probably represents the things that
portfolio studies leave out. Common law countries are greater likelihood than civil law
nations to exhibit a positive correlation. The findings also emphasize how crucial it is to
have adequate time coverage to create a beneficial relationship between financial and
environmental performance.

(Wahba, 2010) in the study “How do institutional shareholders manipulate corporate

environmental strategy to protect their equity value? A study of the implementation of ISO
14001 by Egyptian firms” suggests that several factors, including reducing management
entrenchment, legitimizing existence and activities, and adhering to industry standards,
may serve as moderators of this relationship.. The hypothesis was tested through
econometric analysis using a sample of Egyptian companies, and the results showed that
institutional ownership had a positive and significant impact on a corporation's propensity
to adopt environmental management standards only in situations where money is plentiful
and investment opportunities are few.

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 40

 Table 2.1 An overview of the majority of connected articles.

[Link] Year Paper Title Authors’ name Purpose Process Outcome

& Citation
1 2024 The impact of Treepongkaru To look into Type: Descriptive As per the
environmental, na S, Suttipun how ESG analysis theories of
social and M reporting legitimacy,
governance affected Thai- Data: 147 listed stakeholder,
(ESG) reporting (Treepongkaru listed firms' firms in the ESG and
on corporate na & Suttipun, corporate group, content signaling, the
profitability: 2024) profitability analysis was used researchers
evidence from from 2019 to to quantify the found that
Thailand 2021. ESG reporting. there was a
statistically
Tool: Descriptive significant
analysis, and positive
correlation impact of
matrix and panel ESG
regression. reporting on
business
profitability
in Thailand.
2 2024 Does ESG V Veeravel, The impact of Type: The firm
disclosure really Vijaya ESG Exploratory performance
influence the Prabhagar disclosure research of Indian
firm Murugesan, ratings on the listed
performance? Vijayakumar company Data: NSE 500 enterprises is
Evidence from Narayanamurt performance positively
India hy of companies Tool: Dynamic and
included in panel data significantly
(Veeravel et the Indian regression enhanced by
al., 2024) stock market analysis and ESG
index, NSE Generalised disclosure
500. method of standards.
moments (GMM)

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 41

3 2024 Sustainability Sylvia investigated Type: Empirical Firm success
practices and Veronica the research and
firm Siregar, Aria relationship sustainability
performance: Farah Mita, between Data: Firms in performance
The moderating Fitriany sustainability ASEAN 5 are
role of firm‐, Amarullah, practices and (Indonesia, significantly
industry‐, and Radziah business Singapore, positively
country‐level Mahmud performance Malaysia, correlated.
factors (Siregar et al., as well as the Thailand, and the
2024) moderating Philippines)
influence of
industry, firm, Tool: Regression
and national- analysis
level factors.
4 2024 Theories Del Gesso C, to look at the Type: The study
underlying Lodhi R ideas Exploratory finds that five
environmental, underlying study. main
social and (Del Gesso & ESG theories—
governance Lodhi, 2024) disclosure Data: 142 stakeholder
(ESG) research, selected theory,
disclosure: A providing accounting institutional,
systematic insight in the studies published legitimation,
review of dominant up to June 2023 agency,
accounting theoretical dedicated to signaling
studies. approaches ESG. – and theories—
and new corporate social stand out
perspectives responsibility among the
that support (CSR). thirty-two
this kind of ideas that
disclosure. Tool: Descriptive were
performance identified.
analysis Theories are
frequently
integrated for

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 42

 providing a
full
theoretical
framework.
5 2024 Relationship Makridou G, To look into Type: Empirical The
between ESG Doumpos M, how the research empirical
and corporate Lemonakis C profitability evidence
financial of energy Data: Secondary showed that
performance in (Makridou et firms is data. the ESG
the energy al., 2024) affected by 85 European performance
sector: empirical ESG energy-sector of energy
evidence from companies companies
European had a
companies Tool: Modelling. modestly
Regression negative
analysis effect on their
profitability.
Also, an
independent
assessment of
the ESG
subcompone
nts revealed a
notable
adverse
impact of
environmenta
l
responsibility
.
6 2024 The Effect of by Yiming Xu In order to Type: ESG
Environmental, and Naiping further the Exploratory performance
Social, and Zhu understandin research encourages
Governance g of the corporate

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 43

 (ESG) (Xu & Zhu, fundamental Data: Sample of innovation,
Performance on 2024) relationship A-share listed which
Corporate between companies in benefits CFP.
Financial environmenta Shanghai and
Performance in l, social, and Shenzhen, China
China: Based on governance from 2009 to
the Perspective (ESG) and 2021
of Innovation financial
and Financial performance Tool: Two-way
Constraints in developing fixed effects
nations, it is model research
important to methodology
examine the with fixed time
The effect of and industries
ESG
performance
on business
financial
performance.
(CFP).
7 2023 Environmental, Maji S, Lohia To look into Type: Cross- The findings
social and P how the section study. show a
governance performance positive
(ESG) (Maji & Lohia, of a few Data: Secondary connection
performance and 2023) chosen Indian data with a between
firm companies' sample of 222 corporate
performance in firms is Indian firms. performance
India. affected by and the
their Tool: Ordinary components
environmenta least squares and of ESG
l, social, and simultaneous performance.
governance quantile The quantile
(ESG) regression regression
practices. models results

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 44

 demonstrate
that
geography
has varying
effects on the
conditional
distribution
of corporate
performance
concerning
ESG, with
the positive
effects being
more
prominent at
the top
quantiles.
8 2023 Environmental-, Ahmad H, The impact of Type: Businesses
social-, and Yaqub M, Lee corporate Exploratory can enhance
governance-relat S social study. their capacity
ed factors responsibility for creativity,
for business (Ahmad et al., , gender, Data: Systematic innovative
investment and 2023) governance reviews of online endeavors,
sustainability: a structure, publications. value
scientometric pollution and Tool: Systematic creation, and
review of global waste, Literature financial
trends economic Review and Meta performance
performance, Analysis by
and implementin
environmenta g an ESG
l policy.
sustainability Overall,
on business social and
ESG policy environmenta

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 45

 decisions is l
examined in performance
this article. showed a
strong
positive
correlation
with the
sustainability
of businesses,
indicating a
connection
between the
commercial
sector and
adding value
to society.
9 2023 Sustainability Amina examines the Type: Empirical The results
reporting in Mohamed connection Analysis indicate a
banking and Buallay, Meera between the negative
financial Al Marri, performance Data: Secondary correlation
services sector: a Nohade of banks and data between
regional analysis Nasrallah, financial market
Allam services and Tool: Regression performance
Hamdan Icon, the amount of Analysis (TQ),
Elisabetta sustainability financial
Barone & reporting. performance
Qasim (ROE), and
Zureigat operational
performance
(Mohamed (ROA) and
Buallay et al., ESG. The
2023) performance
is impacted
differently

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 46

 from the
regional and
pillar
viewpoints as
well as the
ESG, pillar,
and region
perspectives.
10 2023 The Impact of Weizhou Su, To investigate Type: Empirical It is
Environmental Nieping Wei, the research discovered
Information Zihan Yuan mechanisms Data: that the
Disclosure on and Sidai Guo behind and Secondary data efficiency of
the Efficiency of effects of Tool: capital
Enterprise (Su et al., environmenta Econometric allocation is
Capital 2023) l information Modelling greatly and
Allocation disclosure on robustly
the improved by
effectiveness environmenta
of capital l information
allocation disclosure;
the impact
varies
depending on
the size,
ownership,
life cycle,
and location
of the
organization.
However, it is
discovered
that creditors
and
employees

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 47

 play a
detrimental
moderating
function in
this effect.
11 2023 Indigenous Andre Poyser To build the Systematic This essay
sustainable and Dan case for Literature makes the
finance as a Daugaard Indigenous Review case that ISF
research field: Sustainable is a
A systematic (Poyser & Finance (ISF) legitimate,
literature review Daugaard, as a separate well-defined
on indigenising 2023) disciplinary topic of
ESG, subject by inquiry unto
sustainability presenting a itself,
and indigenous framework separate from
community for mainstream
practices conceptualizi sustainable
ng and finance and
characterizin other social
g the various and
positions of management
literature. sciences.
12 2023 The impacts of Kai Chang, To investigate Using data The
ESG Xiaochang how envelopment empirical
performance and Cheng , Yiran corporate analysis (DEA) findings
digital finance Wang, Qiming financing is and panel data show that, at
on corporate Liu, Jie Hu impacted by analysis. the 1%
financing the interplay significance
efficiency in (Chang et al., between level, both
China 2023) digital more ESG
finance and performance
corporate and digital
governance, finance
social improve

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 48

 responsibility corporate
, and financing
environmenta efficiency,
l performance and that the
positive
marginal
effect of ESG
performance
on corporate
financing
efficiency is
mitigated by
digital
efficiency
finance.
13 2022 Do sustainability Rahi A, Akter Examining Type: Empirical Using both
practices R, Johansson J how research static and
influence sustainability Data: Secondary dynamic
financial (Rahi et al., (environment data estimators,
performance? 2022) al, social, and Tool: the authors
Evidence from governance, Quantitative discovered
the Nordic or ESG) study using that
financial regulations regression and a sustainable
industry affect the generalized behaviors
financial method of had both
performance moments. positive and
(FP) of the negative
Nordic effects on FP.
financial The authors
sector is the discovered a
aim of this negative
study. correlation
between ESG
practices and

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 49

 FP (earnings
per share,
return on
invested
capital, and
return on
equity). The
authors
discovered a
favorable
relationship
between
governance
and return on
assets.
14 2022 The Impact of El-Chaarani H, to evaluate Type: Empirical Corporate
Corporate Abraham R, how the research governance
Governance on Skaf Y COVID-19 procedures,
the Financial pandemic Data: Secondary such as
Performance of (El-Chaarani affected the data having
the Banking et al., 2022) financial independent
Sector in the performance Tool: Descriptive members on
MENA (Middle of banks in statistics, the board of
Eastern and the correlation and directors, a
North African) understudied Regression (fixed high
Region: An Middle East effects ownership
Immunity Test and North regressions and concentration
of Banks for Africa two-stage least , no political
COVID-19 (MENA) squares) pressure on
region in board
relation to members,
internal and and strong
external legal
corporate protection,

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 50

 governance have
systems. improved
bank
financial
performance.
During the
crisis,
corporate
governance
methods such
as
performance-
based
compensatio
n, anti-
takeover
mechanisms,
small boards,
and the
presence of
women on
them did not
have a major
impact on
bank
performance.
15 2022 ESG disclosure Zhongfei Examine the Type: Empirical Several
and financial Chen, Guanxia impact of research robustness
performance: Xie ESG studies show
Moderating role disclosure on Data: Non- that there is a
of ESG investors (Chen & Xie, the financial financial listed substantial
2022) performance companies in incentive
of listed China effect of ESG
companies in disclosure on

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 51

 China Tool: parallel corporate
between 2000 trend test, financial
and 2020. Goodman-Bacon performance.
decomposition, Companies
replacement of with ESG
dependent investors, a
variables, system longer
GMM estimate, history,
the placebo test significant
media
coverage, and
expensive
agency
expenses
experience a
more
dramatic
effect.
The
relationship
between ESG
disclosure
and financial
performance
is
significantly
moderated by
ESG
investors.
16 2022 Aggregate Florian Berg, examines Type: divides the
Confusion: The Julian F how Exploratory disparity into
Divergence of Kölbel, environmenta research weight,
ESG Ratings Roberto l, social, and measurement
Rigobon governance Data: Secondary , and scope

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 52

 (ESG) are contributions
(Berg et al., different. Tool: Document . 56% of the
2022) the rating variation is
divergence and attributed to
map the different measurement
methodologies , 38% to
onto a common scope, and
taxonomy of 6% to weight.
categories By looking
more closely
at the causes
of
measurement
divergence,
we find
evidence of a
rater effect, in
which a
rater's
perception of
a company as
a whole
affects how
certain
categories are
measured.
17 2022 Sustainability Michel To investigate Emperical Our
performance Coulmont, the patterns in Analysis on analysis's
indicator trends: Sylvie the sample that is findings
a Canadian Berthelot and sustainability comprised of indicate that
industry-based Vincent Gagné performance eight companies the number of
analysis metrics that in four sectors sustainability
(Coulmont et Canadian and our performance
al., 2022) businesses indicators

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 53

 publish in observations published has
their cover a generally
sustainability 19-year period increased
reports over time,
and the three
sustainability
dimensions
have been
addressed to
varying
degrees.
18 2021 Exploring the Salim examines the Type: Empirical The results
Moderating Role Chouaibi, potential research demonstrate
of Social and Matteo Rossi, impact of Data: Panel data a strong and
Ethical Practices Dario Siggia, environmenta (Secondary) positive
in the and Jamel l disclosure Tool: linear correlation
Relationship Chouaibi (ED) on the regression using between
between financial panel data financial
Environmental (Chouaibi et performance performance
Disclosure and al., 2021) (FP) of (FP) and
Financial companies environmenta
Performance: included in l disclosure
Evidence from the ESG (ED). This
ESG Companies index. suggests that
although a
weak
environmenta
l disclosure
lowers
financial
performance,
a good one
raises it.

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 54

19 2021 Financial sector Osadume R, The purpose Type: Empirical According to
sustainability Okene A of this study the study,
and performance research is to exogenous
– Policy (Osadume & ascertain Data: Panel variables
Imperative for Okene, 2021) whether the Secondary Data (SUST)
the monetary sustainability significantly
authorities’ of the Tool: Panel unit affect
financial root tests, endogenous
industry in descriptive variables
Nigeria is statistics, panel (ROA, ROE)
correlated least squares, and in the short
with its co-integration term but have
performance statistical no long-term
and to suggest approaches were effect.
appropriate used at a
policy significance level
measures. of 5%.
20 2021 Sustainable Muhmad S, to become Type: The bulk of
business Muhamad R knowledgeabl Exploratory the examined
practices and e about the study. studies (96%)
financial (Muhmad & sustainability discovered a
performance Muhamad, policies that Data: 361 peer- positive
during pre- and 2021) were put into reviewed articles. correlation
post-SDG place between
adoption following the Tool: Content financial
periods: A adoption of Analysis. success and
systematic the SDGs, the sustainability
review. study's most practices,
important especially
sustainability following the
dimension, adoption of
and the the SDGs.
impact of
sustainability

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 55

 practices on
the financial
performance
of businesses
both before
and after the
SDGs were
adopted.
21 2021 ESG practices Ebru Saygili to ascertain The investigation The study's
and corporate Serafettin whether was conducted findings
financial Arslan, Ayse corporate utilizing the show that
performance: Ozden Birkan financial Capital Markets environmenta
Evidence performance Board's corporate l disclosures
from Borsa (Saygili et al., (CFP) metrics governance have a
Istanbul 2022) of Turkish standards and detrimental
listed firms GRI impact on
are impacted environmental CFP. In the
by indicators. This social aspect
environmenta study examines of ESG,
l, social, and the impact of operational
governance twenty efficiency is
(ESG) independent ESG enhanced by
measures. variables, stakeholder
including firm involvement
disclosures, on in
CFP in an management.
emerging market. Governance
rules relating
to the board
of directors
and
shareholder
rights are

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 56

 advantageous
to CFP..
22 2021 The Impact of Alexandra A. to look into The paper Evidence
ESG factors on Egorova, how analyzes the suggests that
the performance Sergei V. information position of IT IT
of Information Grishunin, technology companies in the organizations
Technology Alexander М. (IT) ESG rating are not at the
Companies Karminsky companies relative to other forefront of
perform in industries, the ESG
(Egorova et al., relation to highlights the key rating game
2021) ESG aspects. strengths right now,
and weaknesses which means
in their ESG that they have
components a chance to
advance their
ESG
practices if
doing so will
strengthen
their position
in the market
and boost
their
performance.
23 2021 Firms and social Stuart L. Examine the Type: Descriptive While a
responsibility: A Gillan, research on study company's
review of ESG Andrew Koch, corporate market,
and CSR Laura T. Starks social Data: focus on owner, and
research in responsibility the most debated leadership
corporate (Gillan et al., (CSR) and and researched traits, as well
finance 2021a) environmenta issues as its risk,
l, social, and performance,
governance and value, are
(ESG) based all strongly

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 57

 on financial correlated
economics, with the
with a focus company's
on corporate ESG/CSR
finance. profile and
activities, our
research
reveals
conflicting
hypotheses
and
unresolved
results that
raise further
questions.
24 2021 Environmental, Eduardo to investigate Linear The results
Social and Duque‐ the possibility Regression suggest a
Governance Grisales, J. of a negatively
(ESG) Scores Aguilera‐ relationship significant
and Financial Caracuel between a connection
Performance of company's between the
Multilatinas: (Duque- superior ESG score
Moderating Grisales & environmenta and FP.
Effects of Aguilera- l, social, and
Geographic Caracuel, governance
International 2021) (ESG) scores
Diversification and its
and Financial financial
Slack performance
(FP) in Latin
American
emerging
markets for

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 58

 multinational
corporations.
25 2020 Analysis of Jha M, to look at the Type: Empirical The absence
corporate Rangarajan K relationship analysis of a causal
sustainability between CFP association
performance and (Jha & and corporate Data: Secondary between the
corporate Rangarajan, sustainability data CSP and CFP
financial 2020) performance variables
performance (CSP). Tool: Multiple suggests that,
causal linkage in regression and for Indian
the Indian the Granger firms as a
context. causality test are whole, the
used with panel CSP-CFP
data. relationship
is basically
insignificant.
26 2020 ESG impact on Bahaaeddin to determine Type: Empirical The results
performance of Ahmed whether a research showed that
US S&P Alareeni and company's ESG
500-listed firms Allam market Data: Secondary disclosure
Hamdan performance data had a
(Tobin's Q), beneficial
(B. A. Alareeni operational Tool: Panel effect on a
& Hamdan, performance regression company's
2020) (ROA), and analysis performance
financial measures.
performance However, a
(ROE) are second
correlated assessment of
with its the ESG sub-
environmenta components
l, social, and showed a
governance negative
(ESG) relationship

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 59

 disclosure. If between
so, how much ROE and
of these ROA and the
relationships disclosure of
are positive, corporate
negative, or social
even neutral? responsibility
(CSR) and
environmenta
l data (EVN).
EVN and
CSR
disclosure
have a
favorable
correlation
with Tobin's
Q. Moreover,
there is a
negative link
with ROE
and a positive
correlation
with Tobin's
Q and
corporate
governance
(CG)
transparency.
More
importantly,
ESG, CSR,
EVN, and
CG are

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 60

 generally
higher in
organizations
with high
asset values
and high
financial
leverage.
Furthermore,
when ESG,
EVN, CSR,
and CG
disclosure
levels rise, so
do ROA and
ROE.
27 2020 Effect of ESG Muhammet to investigate Type: Empirical The findings
data on the Emin Sisman, the impact on Research indicate that
financial Serkan businesses' while
performance of Cankaya financial Data: Airline investors in
companies: a performance companies the aviation
study on the (Cankaya & of the ESG sector do not
airline sector Sisman, 2020) scores Tool: Panel take into
produced for regression account the
airlines. ESG scores
of firms, the
ESG scores
calculated for
companies in
the airline
industry do
not affect the
financial
performance

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 61

 of
enterprises.
28 2019 Impact of Green Jayathilake S The different Type: According to
Financing for the facets of Interpretivism the report,
Corporate (Jayathilake & green finance, research green money
Governance in Authour, n.d.) the bank's and
the Banking involvement Data: Secondary sustainable
Industry in it, and its data development
effects on objectives
corporate Tool: Mix of work hand in
governance in quantitative and hand.
the banking qualitative
industry will analysis
all be covered
in this
examination.
29 2019 Corporate Abughniem, To look into Type: Empirical significant
Sustainability as M. S., Al how reporting research and negative
an Antecedent to Aishat, M. H., on effects on
The and Hamdan, sustainability Data: Secondary return on
Financial A. M. affects the data investment
Performance: An performance from
Empirical Study (Abughniem et of the Tool: panel environmenta
al., 2019) company random-effect l
regression responsibility
, asset scale,
and human
resource
accountabilit
y. Tobin's Q
is
significantly
positively
impacted by

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 62

 SR, but it is
strongly
negatively
impacted by
size,
environmenta
l
responsibility
, and human
resource
responsibility
.
30 2019 Towards a more Giovanni The authors The authors did a The
ethical market: Landi and contend that panel data study empirical
the impact of Mauro the using a Fixed findings
ESG rating on Sciarelli extraordinary Effects Model in show that
corporate returns of order to confirm managers in
financial (Landi & Italian the relationship Italy have
performance Sciarelli, companies between an ESG been more
2019) listed on the Rating and an interested in
Financial anomalous return sustainability
Times Stock on a company. and corporate
Exchange By implementing social
Milano Indice the Fama-French responsibility
di Borsa technique and a (CSR) over
(FTSE MIB) yearly Jensen's the past ten
Index may be Performance years, and
impacted by Index for each that the
the company under quality of
environmenta review, they were ESG
l, social, and able to measure assessments
governance abnormal returns. has improved
(ESG) as a result of
paradigm, trustworthy

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 63

 which is corporate
intended to disclosure.
quantify Therefore,
corporate even though
social investors
performance have been
by evaluating using ESG
issuance. factors in
their stock
selection
processes, the
authors
discovered
that doing
socially
responsible
investing
(SRI) had a
statistically
significant
negative
influence on
market
premium.
31 2018 Corporate social Maqbool S, to look into Type: Empirical Findings
responsibility Zameer M the research indicate that
and financial relationship, CSR has a
performance: An (Maqbool & in the Indian Data: Secondary positive
empirical Zameer, 2018) context, data effect on
analysis of between Indian
Indian banks financial Tool: Panel institutions'
success and regression model financial
corporate success.
social

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 64

 responsibility
.
32 2018 Does corporate Bahaaeddin To determine Type: Empirical The
governance Alareeni if research hypothesis
influence corporations that a larger
earnings (B. Alareeni, are involved Data: Secondary board equates
management in 2018) in earnings data to fewer EM
listed management procedures is
companies in (EM), this Tool: Panel supported by
Bahrain Bourse? research regression model the negative
examines association
data from found
Bahrain between
Bourse listed board size
companies. and EM.
Furthermore, Furthermore,
the effect of EM and
various board
corporate independence
governance have a
characteristic positive link,
s on EM meaning that
practices is the degree of
examined. EM practices
rises as the
number of
independent
directors
does.
33 2018 Exploring Social Robert G. To investigate Type: Working We discover
Origins in the Eccles and the variations paper that groups of
Construction of Judith C. in ESG value-versus
ESG Measures Stroehle metrics due to Data: Primary values-based
Working Paper (a) the varied and Seconday businesses

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 65

 Title: Exploring (Stroehle et al., social may be used
Social Origins in 2018) backgrounds Tools: to categorize
the Construction of data Examining five data vendors,
of ESG providers and cases of eight and that the
Measures (b) their need interconnected dynamics of
to establish a ESG data market
distinct vendors consolidation
identity in an and rating and the
increasingly agencies, we thus mainstreamin
mature show how the g of the use of
market. origin of each ESG data are
company (their connected to
founding a change in
principles, legal the kind of
status, purpose, investors in
etc.) strongly the ESG area
influences its from values-
conception of driven to
sustainability, value-driven.
definition of
materiality, and
by extension, the
way ESG issues
are measured and
sold.
34 2018 The expansion Hervé Stolowy to learn the We start by We find that
of non-financial & Luc Paugam definition and looking at the the amount of
reporting: an recent variations in NFR
exploratory (Stolowy & expansion of definitions and increased
study Paugam, 2018) non-financial modern NFR significantly,
reporting methods. We especially
(NFR). discover a between
deficiency in 2006 and
convergence 2011. New

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 66

 between leading disclosures
sustainable about the
enterprises and environment,
regulators/standa human
rd-setters. capital,
Second, we look performance,
at how the and strategy
amount and kind seem to be
of NFR that the driving
businesses forces behind
reported this shift.
changing
between 2006
and 2016.

Consideration
was given to a
sample of South
African
businesses.
35 2016 Carroll’s Archie B. An The author Then, he
pyramid of CSR: Carroll examination comments on the discusses a
taking another of the framework's number of
look (Carroll, 2016) renowned popular useage aspects of the
Carroll's and then presents model that
Pyramid of a summary were not
Corporate of the four-part highlighted
Social definitional when it was
Responsibilit framework upon first released:
y (CSR) in which the the way
greater detail pyramid was ethics
created. permeate the
pyramid; the
inherent

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 67

 tensions and
trade-offs;
the
integrated,
cohesive
whole; the
sustainable
stakeholder
framework;
and the
model's
global
applicability
and use in
various
contexts. In
closing, the
piece casts its
gaze into the
future.
36 2015 ESG and Gunnar Friede, To The study All
financial Timo Busch extrapolate conducts vote reasonable
performance: and Alexander the results of count investors
aggregated Bassen the ESG investigations, should be
evidence from study meta-analyses, inclined
more than 2000 (Friede et al., conducted by and synthesizes toward long-
empirical studies 2015) scholars and the results of term
investors roughly 2200 responsible
different studies. investing in
order to
fulfill their
fiduciary
duties and to
better align

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 68

 their interests
with the goals
of society as a
whole. To
fully realize
the potential
of value-
enhancing
ESG
elements, a
thorough and
profound
understandin
g of how to
incorporate
them into
investment
processes is
necessary.
37 2013 The relationship Siew R, The impact of Type: Cross- The study
between Balatbat M, such sectional study. finds that
sustainability Carmichael D reporting on while there is
practices and construction Data: 44 a weak
financial (Siew et al., companies' companies used correlation
performance of 2013) financial in Parts I and II between
construction performance were selected financial
companies. is from the performance
investigated Australian and ESG
in this article. Stock Exchange scores,
(ASX, 2012) construction
listing. Part III companies
focuses only on that issue
17 construction non-financial
companies. reports

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 69

 outperform
Tool: A range of those that do
financial ratios. not in a
number of
chosen
financial
ratios. The
majority of
publicly-
traded
construction
companies
under
investigation
have low
levels of
reporting.
38 2013 ESG: From Carol Royal Introducing a This study Because
Negative and Loretta fifth- examines the listed
Screening To O’Donnell generation existing and companies
Human model that prospective roles currently
Capital Analysis (Royal & systematicall of regulators in only provide
O’Donnell, y integrates regulating partial
2013) important atypical measures information
intangibles of value. It does about how
into the this by reviewing they create
Environment the literature and value,
al, Social, and drawing on a institutional
Governance variety of investors'
(ESG) qualitative power is
investment investigations based on their
process, like and case studies. superior
human capital understandin
analysis. g of the

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 70

 operations of
the
companies in
which they
invest. Their
power,
however, is
limited by the
quality of the
information
they use to
make
financial
decisions for
their clients.
39 2011 Changing the Jemel-Fornetty to look into Type: Analytical The study's
dominant H, Louche C, how these framework based conclusions
convention: The Bourghelle D new on institutional show that
role of emerging initiatives theory many players
initiatives in (Jemel- improve on and convention have taken a
mainstreaming Fornetty et al., established approach number of
ESG 2011) investing steps to
practices and Data: Primary promote the
adjust ESG data through incorporation
data into interviews and of ESG
investee secondary data. issues. To
companies' incorporate
long-term Tool: ESG
shareholder Constructed an information
value. analytical into the
framework using prevailing
convention communal
approach and belief, three
institutional institutional

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 71

 theory, and mechanisms
examined a —coercive,
chosen set of mimetic, and
initiatives. normative—
must be
promoted and
reinforced. It
is difficult to
predict at this
moment if
these efforts
will be
successful in
altering the
general
consensus
regarding
stock
valuation and
investing
practices.
40 2010 Does Eva Analyzing the Type: Empirical The findings
environmental Horváthová variation in analysis imply that the
performance the nexus is
affect financial (Horváthová, relationship Data: Secondary affected by
performance? A 2010) between data the empirical
meta-analysis financial and method
environmenta Tool: Meta- employed,
l performance regression and that
analysis employing
basic
correlation
coefficients
rather than

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 72

 more
sophisticated
econometric
research
greatly raises
the
probability of
discovering a
negative
connection
between
environmenta
l and
financial
performance.
The findings
also show
that portfolio
studies
typically
report a
negative
relationship
between
financial
success and
environmenta
l factors. This
probably
represents the
things that
portfolio
studies leave
out. Common

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 73

 law countries
are more
likely than
civil law
nations to
exhibit the
positive
correlation.
The findings
also
emphasize
how crucial it
is to have
adequate
time
coverage in
order to
create a
beneficial
relationship
between
financial and
environmenta
l
performance.

2.4 Research Gap

Even if there is a burgeoning interest in learning more about ESG aspects affect business
financial performance, there are still a lot of important gaps in the literature that need to
be filled. Although a great deal of work has been done on the connection between ESG
practices and financial results, the mechanisms and contextual factors influencing this link
are still unclear and inconclusive. Eccles and Serafeim (2013) conducted a meta-analysis
which revealed a favorable correlation between financial performance and ESG

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 74

performance in a range of businesses and geographical areas. Nonetheless, the research
recognized the existence of variability in the magnitude and orientation of this correlation,
emphasizing the necessity for more intricate evaluations.

In a similar vein, (Flammer 2015) contends that although ESG initiatives can help create
long-term value, it is still unclear how precisely they affect financial performance. The
intricacy of the relationship between ESG and financial performance has been further
highlighted by empirical studies by (Derwall et al. 2015) and Khan et al. (2016), which
further highlight the significance of context-specific analysis and methodological rigor.

Furthermore, some research work has looked at the effects of specific ESG elements on
financial performance, such as social responsibility practices or environmental initiatives
(Albino-Pimentel et al., 2018; Belu et al., 2016), there aren't many comprehensive studies
that take into account how various ESG factors interact. Given the increasing acceptance
of integrated ESG policies by regulators, investors, and other stakeholders, this gap is
especially important.

It is imperative to fill in these gaps to guide business decision-making and policy

formulation, in addition to advance scholarly understanding. Insightful information for
businesses looking should include sustainability considerations. should include
sustainability considerations into their strategic agendas can be gained from future study
by dissecting the complex processes by which ESG variables affect financial performance
in various organizational situations. The current study aims to determine how ESG
practices affect the manufacturing companies in the BSE 500 in terms of financial
performance. The researcher has decided to study on this region because it appears to be
less researched.

Impact of ESG Practices on Financial Performance: A Study on Select Indian Corporates 75

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