ESG Parameters an indicator for Financial performance: An empirical study on stocks listed in NIFTY

Abstract

Purpose: This paper wishes to empirically scrutinize the influence of ESG score of Indian publicly listed companies in attracting Foreign Institutional Investors and also how ESG factors relate to the profitability and valuation of the firms.

Theoretical Framework: Socio-economic development of a country is paramount importance, also is the concern over the environmental stability. So it is eminent to know the investments that are both sustainable and responsible from the environment, social and governance perspectives.

Design/Methodology/Approach: Annual ESG score of selected Nifty stocks were taken and the period of study pertains to 2022-23. Regression exploration was used to know the relationships between the selected factors.

Findings: Findings of the study was explained from 3 perspectives. First is the implication of ESG scores in appealing FIIs towards the stock, second is to know the affiliation amongst ESG scores and profitability and finally to know the affiliation amongst ESG scores and value of the firm.

Research, Practical/Social Implications: Outcome of the study have applied consequences for regulators, investors and the policy makers. Also highlighted is the importance of business practices to be sustainable.

Originality/Value: he framework used here is an innovative approach to know the relationships between ESG Score and FIIs interest, ESG Score and Profitability and ESG Score and intrinsic value.