Do ESG Factors Influence Risk-Adjusted Return on Equity? Evidence from the Nigeria Banking Sector

Purpose Environmental, social and governance disclosures are becoming increasingly important in the energy sector, which is considered a sensitive sector due to its high environmental and social impacts. This study aims to investigate the impact of these disclosures on the corporate financial performance of global enterprises in the energy sector. Design/methodology/approach This study examines the 100 most prominent energy companies listed globally by market capitalization in 2022. The independent variable is the LSEG disclosure score (ESG Score), which rates the extent of environmental, social and governance disclosures. Return on assets (ROA) and return on equity (ROE), which measure corporate financial performance, are the dependent variables. Regression analysis analyzes the impact of environmental, social and governance disclosures on corporate financial performance. Findings The results show that there is an insignificant relationship between environmental, social and governance disclosures and corporate financial performance in the energy sector. The insignificant relationship is associated with the low disclosure performance of enterprises in the sector regarding their sustainability strategies, impacts and performance. When the relationship between environmental, social and governance disclosures and corporate financial performance is evaluated on individual dimensions, mixed results (negative, positive or insignificant) are obtained. There is a negative relationship between environmental disclosures and corporate financial performance, a positive relationship between social disclosures and corporate financial performance (ROA only), and an insignificant relationship between governance disclosures and corporate financial performance. Originality/value The study provides new evidence for the ongoing debate between environmental, social and governance disclosures and corporate financial performance through a global sample of energy businesses operating in different parts of the world. These businesses are expected to play a leading role in the functioning of the global economy through their sustainability strategies and practices.

Since its formal introduction in 2004, the environmental, social and governance (ESG) criteria have evolved into critical non-financial performance metrics in corporate governance and investment decision-making. Although the initial adoption was slow, ESG has gained substantial momentum as investors increasingly pursue responsible investment strategies. Corporations are now under greater pressure to integrate ESG principles into their business operations, especially in sectors with significant environmental and social impacts, such as real estate. In Malaysia, regulatory bodies like Bursa Malaysia have mandated ESG disclosures for all listed companies. Despite this, the level of ESG compliance within the property sector remains relatively low. This shortfall is primarily due to limited awareness, inadequate technical understanding and a lack of integration of ESG frameworks among key industry stakeholders. These challenges can hinder firms from meeting ESG expectations, leading to reputational risks and potential impacts on financial performance. This study investigates the relationship between ESG compliance and financial performance among 60 Malaysian listed property companies from 2019 to 2022. Using Pearson correlation analysis, the study evaluates the association between ESG indicators and key financial metrics – return on assets (ROA), return on equity (ROE), net profit margin (NPM), debt-to-equity ratio (D/E) and current ratio (CR). The findings reveal a positive correlation between ESG compliance and profitability indicators, suggesting that companies with stronger ESG practices tend to perform better financially. These results offer valuable insights for policymakers, investors and property developers in aligning ESG strategies with corporate financial goals. Moreover, the findings underscore the importance of strengthening ESG literacy and implementation in Malaysia’s property sector to enhance long-term sustainability and competitive advantage.

This study investigated the relationship between environmental, social and governance (ESG) disclosure and investment in R&D and the firm’s financial performance. The firm’s financial performance is measured through indicators such as financial (return on equity (ROE)), operational (return on assets (ROA)) and market performance (Tobin’s Q). The study covers sample selection in 7 years, ranging from FY 2016–2017 to FY 2022–2023, of Indian-listed firms on the Bombay Stock Exchange. This study used panel data models: multiple regression, fixed effects model and system generalised method of moments. The empirical results confirmed that the overall ESG disclosure positively correlates with ROE, ROA and Tobin’s Q. However, the results of ESG interrelated elements are measured separately by ESG disclosures. ENV, CSR and GOV disclosure reported a positive relationship across all corporate performance indicators of ROE, ROA and Tobin’s Q. The disclosure of governance and the firm’s investment in research and development (R&D) are significantly and positively correlated with corporate performance. Also, this study examines the effects of investment in R&D’s mediating role in improving ESG score and enhancing corporate performance. The study finds that ordering inferences by R&D has a more significant impact on improving ESG scores and financial performance. The study’s outcomes can be helpful to the company’s augmentation of the ESG matter disclosure and better quality in reporting and achieving ESG standards and financial performance. Further, these results benefit investors, managers and policymakers mostly.

In response to the need to deepen research on the impact of corporate ESG (environmental, social, and governance) pillars on the financial performance (FP) of banks, this study analyzes the relationship between ESG and FP in banks from emerging countries in Southeast Asia during the period 2010–2020. Using a sample of 19 banks from five countries with emerging economies, this article examines the level of information on ESG activities that banks report in each of their pillars and these pillars' impact on the FP. The research was conducted through an exploratory study using panel data (Thomson Reuters ESG data), parametric correlations, and regression models. FP is measured by return on assets (ROA), return on equity (ROE), and Tobin's Q (TQ), or the prevailing market price for exchanging assets divided by the market price of the goods newly produced. The findings show that ESG has a significant negative effect on all measures of FP (ROA, ROE, and TQ). However, analysis of the relationship of each individual ESG pillar to FP obtains different findings for each. Our study also shows differences in the level of ESG information in each country as a result of their specific economic characteristics. This study has limitations due to the limited ESG, bank, and country data that Thomson Reuters contains on banks in this region of Asia. In future research, more banks and more countries can be added to the analysis, as well as other control variables related to FP.

The aim of this study is to explore the impact of overall and individual environmental, social and governance (ESG) disclosure scores on firm performance of the financial and non-financial companies. The study has used the data of 95 companies for the period of 2020 to 2023. The data has been calculated from Thomson Reuters Framework. The sample companies’ ESG disclosure score is calculated by content analysis, and the effect of the ESG score on firm performance is examined using panel data regression analysis. The environmental (ENV) and social (SOC) disclosure scores separately as well as the overall ESG score have an insignificant impact on return on asset (ROA). The ROA results have also additionally showed that the operational performance of the governance disclosure score is negatively impacted, but not significantly. According to return on equity (ROE) results, the individual (SOC) disclosure scores significant positive impact on ROE (financial performance). However, individual ENV and governance disclosure scores insignificant negative impact on ROE. Simultaneously, the analysis of overall ESG disclosure score is insignificant positive impact on ROE. Based on market-based performance (Tobin’s Q), results show that individual ENV disclosure score has a significant positive impact. In contrast, individual SOC and governance disclosure scores have an insignificant positive impact on Tobin’s Q. Simultaneously, the analysis of overall ESG disclosure score shows significant and positive impact on Tobin’s Q. Thus, ROA, ROE and Tobin’s Q show significant impact of firm size on form performance.

Purpose This study investigates the financial impact of Environmental, Social, and Governance (ESG) practices on the performance of publicly listed property companies in Malaysia. Amid growing regulatory and investor pressure, the research aims to assess how ESG dimensions influence operational efficiency, profitability, and market valuation in an emerging market context, where ESG integration remains uneven and underexplored. Design/methodology/approach Using panel data from 91 Malaysian property firms over the period 2012–2023, the study applies Ordinary Least Squares (OLS) regression models and descriptive statistical analyses to evaluate the relationship between ESG scores—both overall and disaggregated by pillar—and a firm’s performance indicators, including Return on Assets (ROA), Return on Equity (ROE), and Tobin’s Q. The models incorporate firm-level and macroeconomic control variables to ensure robustness and contextual relevance. Findings The findings reveal that overall ESG performance positively correlates with financial outcomes, with governance and social pillars exerting the strongest influence. Governance quality significantly enhances market valuation, while social initiatives are positively associated with profitability. Environmental performance shows limited short-term impact. Asset growth emerges as a critical driver of financial success, whereas high financial leverage undermines performance. A firm’s size and Gross Domestic Product (GDP) have marginal effects, suggesting internal strategies outweigh macroeconomic conditions in this context. Practical implications The results provide actionable insights for corporate leaders, investors, and policymakers in Malaysia and similar emerging markets. They highlight the importance of embedding ESG into core business strategies rather than treating it as a compliance exercise. The study supports recent regulatory efforts to strengthen ESG reporting and urges firms to prioritise governance structures, stakeholder engagement, and sustainable growth over debt-driven expansion. Originality/value This study offers one of the first large-scale, sector-specific analyses of ESG performance in Malaysia’s real estate industry. It contributes original empirical evidence to the global ESG literature by contextualising ESG-financial linkages in an emerging economy. The findings underscore the strategic value of ESG integration and demonstrate how localised ESG maturity can influence financial outcomes in capital-intensive sectors like real estate.

This study aims to compare the overall environment, social and governance (ESG) risk score and environment risk score, social risk score and governance risk scores across different industrial sectors in India and explore the impact of overall ESG risk score, environmental, social and governance risk score on firm performance. The ESG risk score is collected for 2021–2022 from Yahoo Finance, and financial data were collected from Prowess IQ. The Nifty 100 index of NSE is used as a platform to shortlist firms. Tobin’s Q, return on assets (ROA) and return on equity (ROE) are used as proxy for the firm performance which determines the market-based, operating and financial performance, respectively. We found a significant difference among the ESG risk scores, ESG risk scores of different industries. There is a low correlation between ESG scores, environment scores, social scores, governance scores and Tobin’s Q, ROA and ROE. The regression results show that the ESG risk score has an insignificant negative impact on Tobin’s Q (market-based performance) and the environmental risk scores, social risk scores and governance risk scores have an insignificant positive impact on the Tobin’s Q. ESG risk score has an insignificant negative impact on ROA (operating performance) and ROE (financing performance) while the environment risk scores, social risk scores and governance risk scores have an insignificant positive effect on ROA and ROE. Thus, ESG risk score and its components do not show any significant impact on firm performance.

Purpose: This paper examined the impact of Environmental, Social and Governance (ESG) scores of for-profit colleges, universities, and professional schools on their market and financial results. Design/methodology/approach: Sample data from 50 companies, national and international, listed on a stock exchange and with ESG data available from 2012 to 2021 was obtained on the EIKON-REFINITIV information database. Performance variables comprised Tobin’s Q and Market-to-Book (MTB), widely adopted in similar economic studies. Return on Assets (ROA) and Return on Equity (ROE) conformed to the financial performance variables. Explanatory variables consisted of ESG combined, ESG Social Pillar, Environmental Pillar, and Governance Pillar indexes. The analysis used the Generalized Method of Moments regression (GMM). Findings: ESG combined showed a significant positive relationship with Social Pillar scores and financial performance, represented by ROE and ROA, as found by other studies. Conversely, we observed a significant negative relationship between ESG combined and Social Pillar scores and market indicators (Tobin’s Q and MTB). Practical implications: Results indicate that although ESG combined, Social Pillar scores, and financial performance are positively related to financial results, these do not reflect positive market recognition or price shares. Originality: First-time results for this sector.

PurposeThis study investigates the relationship between the level of sustainability disclosure and telecommunication and information technology (IT) sectors' performance (operational, financial and market).Design/methodology/approachUsing data culled from 4,458 observations from 60 different countries for 10 years (2008–2017), an independent variable derived from environmental, social and governance (ESG) score are regressed against dependent manufacture performance indicator variables [return on assets (ROA), return on equity (ROE) and Tobin's Q (TQ)]. Two types of control variables complete the regression analysis in this study: firm-specific and macroeconomic.FindingsThe findings elicited from the empirical results demonstrate that there is a significant negative relationship between ESG and market performance (TQ). However, there is no significant effect of ESG on both operational (ROA) and financial performance (ROE). Moreover, the findings elicited from the partial least square structural equation modeling the relationship between ESG and ROA is stronger in emerging than in developed economies.Practical implicationsThe authors' opinion for policy makers is that it is essential to promote and implement the appropriate legislative framework for sustainability reporting, which should enhance both the sustainability practices as well the profitability of IT firms.Originality/valueThe model in this study presents a valuable analytical framework for exploring sustainability disclosure as a driver of performance in telecommunication and IT sectors' economies. In addition, this study highlights telecommunication and IT sectors' management lacunae manifesting in terms of the weak nexus between each component of ESG and IT sectors' performance.

Purpose This study aims to examine the impact of environmental, social and governance (ESG) practices on the financial performance of family-owned firms in Mexico. It investigates explicitly whether ESG integration leads to improved outcomes and how the unique governance structures of family firms moderate this relationship. Design/methodology/approach This study utilizes panel data from 128 Mexican listed companies between 2014 and 2022, employing a fixed-effects model to examine the relationship between ESG practices and financial performance, as measured by returns on equity (ROE), return on assets (ROA) and operating margin. Family ownership is analyzed as a moderating factor, and robustness checks include dynamic Generalized Method of Moments (GMM) models and winsorization to control for outliers. Findings The results show that family firms integrating ESG – particularly environmental initiatives – exhibit significantly higher ROE and operating margins than nonfamily firms. However, the effect on ROA is selective, appearing only in robustness and subsample analyses. ESG adoption within family firms offers partial performance benefits, primarily through environmental and governance practices, which align with their long-term orientation and socioemotional wealth priorities. Originality/value This paper contributes to the literature by offering empirical evidence from an emerging economy, highlighting the nuanced impact of ESG integration on family firms. It advances socioemotional wealth theory in the context of corporate governance and sustainability, offering practical insights for investors, policymakers and family business leaders.

The research examines the link between financial performance and sustainable practices reflected by ESG (Environmental, Social, and Governance) scores in select Indian companies.We employ a sample of thirty companies with the highest ESG scores from the Nifty 100 ESG index, and examine how their financial performance is impacted by their performance in ESG criterion scores.The study analyses accounting as well as market data for a period of five years from 2020 to 2024 using Fixed Effect regression and System GMM (System Generalized Method of Moments) model and correlation matrix.The model includes Tobin's Q, Return on Asset (RoA), and Return on Equity (RoE) as dependent variables, while ESG performance as the main independent variable.The result of the study reveals a better ESG performance causes financial performance, reiterating the need for sustainability reporting-which includes disclosing ESG scores.This would help sustainable investment practices as well as company practices.The findings have significance for investors, corporations, regulators, and legislators.

With increasing global focus on sustainability and corporate responsibility, the demand for comprehensive Environmental, Social, and Governance (ESG) disclosures has grown significantly. This research explores the relationship between ESG (Environmental, Social, and Governance) disclosures and the financial performance of publicly traded companies in China. Utilizing both descriptive and inferential statistical techniques, we assess key financial indicators, including Return on Assets (ROA), Return on Equity (ROE), and Tobin’s Q, to investigate the influence of ESG reporting on financial outcomes. The research demonstrates that that firms with greater ESG disclosure, particularly in environmental and social aspects, generally experience improved profitability and enhanced investor trust. Additionally, the study highlights that comprehensive ESG reporting can increase market valuation, supporting long-term financial success. The research provides essential insights about ESG practices in China's emerging market as it presents practical recommendations for business leaders and policymakers and investors.

Extensive research has focused on the connection between ESG and banking performance. However, a literature gap exists in the study of the influence of ESG disclosures on the banking and financial services sector, particularly in Far East Asia and ASEAN countries compared to Europe and North America. This study addresses this gap by employing data panel regression to investigate how environmental, social, and governance (ESG) factors affect bank performance in these regions. We analyze the correlation between ESG performance and various measures of bank performance: return on assets (ROA), return on equity (ROE), Tobin's Q, and Stock Return. Our findings reveal that stronger ESG performance in banks tends to have a negative impact on financial, operational and market performance. This research contributes to the existing literature on the relationship between ESG factors and banking performance and offers valuable insights for policymakers, investors, and banking practitioners in Far East Asia.

As we are witnessing a shift of paradigm from traditional economic growth towards sustainable development, backed by United Nation’s Sustainable Development Goals call to action, the concept of Environmental, Social and Governance (ESG) has been integrated in almost all aspects of the economy. Firms are probably the category of stakeholders towards the most expectations have been made for them to do better in terms of ESG. Significant scrutiny is being put on firms activating in traditionally emission-intensive sectors however, one cannot deny the aspect that the polluting sectors of economy have been the main pillar of economic growth since the industrial revolution. The current research aims at studying in what way the ESG performance of polluting firms is backed by improved financial performance and whether greening these firms leads to a trade-off or a win-win situation. By doing so, the paper aims at filling a gap in the existing literature as there is significant evidence concerning the relationship between ESG and financial performance in general, while a limited number of studies focus on firms activating in emission-intensive sectors. We perform the analysis using panel data regression models for a set of 138 firms registered across the European Union and over a period of 14 years. We look at financial performance from both a profitability and as well as market value perspective and the findings indicate that improvements in governance and social performance positively influence return on assets (ROA) and return on equity (ROE), while environmental performance, as well as the aggregated ESG score, has a limited impact, particularly in the case of Tobin’s Q. The study brings valuable insights to both business actors and policymakers by highlighting that the social and governance goals can be attained without sacrificing financial performance, while greening polluting firms may be perceived as burdensome and could imply financial trade-offs.

<p>This paper examines the relationship between Corporate Social Performance (CSP) and Corporate Financial Performance (CFP) of 286 Taiwan-listed firms during the period 2012- 2017. I use Bloomberg’s Environmental, Social and Governance (ESG) Disclosure score to proxy CSP. The CFP is measured by two accounting-based measures, namely, Return on Assets (ROA), Return on Equity (ROE), and a market-based measure as annual stock returns (Stock Returns). Results suggest that CSP influences on ROE and ROA in an inverted U-shaped pattern, supporting that the strategic CSR motive satisfies the profit maximization assumption; better current ROE (Stock Returns) will lead to subsequent CSP improvement in a positive quadratic (inverted U-shape) pattern, thus supporting the slack resources theory. To sum up, there is a quadratic bidirectional relationship between CSP and ROE of Taiwan-listed firms. </p> <p> Further, disentangling Bloomberg’s ESG Disclosure score to proxy environmental, social, and governance performance, which shows that the direct effect of environmental (social) performance on accounting-based measures of CFP is increasing (decreasing) return to scale. Hence, the Environmental Corporate Social Responsibility (ECSR) investment by TWSE listed firms benefits CFP should be encouraged in cases where the indirect influence of environmental performance on ROE and ROA through governance performance is manageable, supporting Natural-resource-based View of the firm (NRBV).</p> <p> </p>