The impact of sustainability practices on financial performance: empirical evidence from Sweden

Abstract

This study aims at empirically exploring the influence of sustainability practices on the finan cial performance of 116 listed Swedish companies in the year 2019. The research findings indicate a positive relationship between corporate sustainability and financial performance that is measured by earnings yield, return on asset, return on equity and return on capital employed. However, when it comes to a market-based financial measure, Tobin’s Q, the result is inconclusive. Finally, to improve financial performance, firms are recommended to e ngaging in Dow Jones Sustainability Index, prepare their sustainability report in accordance with Global Reporting Initiative (GRI) Standards, improve their sustainable growth rate, as well as keep a high position in the corporate social responsibility ranking.