Relationship of ESG Scores with Firm Performance: A Cross-Sectional Study
This study explores if there is a significant relationship between ESG Disclosure score and the financial performance of an organization. We have examined 275 companies listed on BSE 500 for which ESG Score is available for 2021. To examine the relationship ordinary least square method is used. ROA is taken as a Dependent variable whereas environmental score, social score, governance score, and collective ESG score are taken as Independent variables. Firm size, net sales growth, and financial leverage are taken as control variables. The findings of this study indicate that there is no significant relationship between ESG score and financial performance of a firm at 5% level of significance. These findings suggest that there is a misalignment between the Business’s overall plan and its ESG practices.