The Impact of ESG on Financial Performance of Top 100 Companies of Pakistan

Abstract

The objective of this study is to investigate the impact of ESG on financial performance. The present study is accounting-based research, i.e. ROE and ROA are used to measure the financial performance of companies. Data for the study is taken from financial statements for the period of 2018 to 2022 from the top 100 companies of Pakistan, which are listed on PSX. Results which are extracted from the Random Effects model determine that ESG has a significant effect on ROA and ROE. The findings of this study are important to management and for formulating policies of companies. According to the findings of this research study, to improve a company’s financial performance over the long term, companies need to allocate their resources and invest in activities that are related to (ESG).