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Does sustainability performance impact financial performance? Evidence from Indian service sector firms

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  • Gaurav Jyoti
  • Ashu Khanna

Abstract

The present scenario of growth and development is focused on sustainable development. It can be sustainable only if it does not focus on profit maximization at any cost but also maximizes the interests and value addition of various stakeholders by not affecting the environment and natural resources. This paper examines the impact of the firm's sustainable performance on the financial performance of service sector companies listed on the Bombay Stock Exchange. The study outcomes indicate a significant negative relationship between the Environment score with Return on Assets (ROA) and Return on capital employed (ROCE) of the selected companies. In contrast, only the Social score shows a significant negative association with the Return on equity. Environmental, social, and governance combined score is also negatively significant with the ROA and ROCE. The practical implications of the study would help academicians, business entities, corporates, policymakers, regulatory authorities, and governments to understand the relationship better. It can also help and motivate organizations to operate more efficiently and implement sustainable approaches, especially in rapidly emerging economies like India.

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  • Gaurav Jyoti & Ashu Khanna, 2021. "Does sustainability performance impact financial performance? Evidence from Indian service sector firms," Sustainable Development, John Wiley & Sons, Ltd., vol. 29(6), pages 1086-1095, November.
    • Handle: RePEc:wly:sustdv:v:29:y:2021:i:6:p:1086-1095
    DOI: 10.1002/sd.2204
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    13. Manel Gharbi & Anis Jarboui, 2023. "The Moderating Effect of Dividend Policy on the Relationship between Corporate Social Responsibility and Financial Performance: Evidence from French Context," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(2), pages 97-114.
    14. Herenia Gutiérrez-Ponce & Sigit Arie Wibowo, 2023. "Do Sustainability Activities Affect the Financial Performance of Banks? The Case of Indonesian Banks," Sustainability, MDPI, vol. 15(8), pages 1-17, April.
    15. Rao, Amar & Dagar, Vishal & Sohag, Kazi & Dagher, Leila & Tanin, Tauhidul Islam, 2023. "Good for the planet, good for the wallet: The ESG impact on financial performance in India," Finance Research Letters, Elsevier, vol. 56(C).
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    17. Roberto Herrera Barriga & Diana Escandon‐Barbosa, 2024. "Synergizing board dynamics, sustainability, and strategy for international success," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(4), pages 3368-3378, July.
    18. Kun‐Shan Wu & Bao‐Guang Chang, 2022. "The concave–convex effects of environmental, social and governance on high‐tech firm value: Quantile regression approach," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(5), pages 1527-1545, September.

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