Nexus Between Sustainability Reporting and Financial Performance: Evidence from the Indian Banking Sector

Abstract

Businesses all over the world have moved quickly to incorporate the idea of sustainability reporting into their operations in response to the demand from stakeholders for increased openness on environmental, social, and governance (ESG) issues.This study aims to evaluate the link between environmental, social, and governance factors (ESG) and the operational performance (Return on Assets) & financial performance (Return on Equity) of banks. This research looks at the BSE 500 banks over the course of five years (2017-2022). Disclosure of environmental, social, and governance (ESG) factors is the independent variable, whereas performance indicators are the dependent variables (return on assets & return on equity). The conclusions that are obtained from the descriptive and correlation analysis illustrate that environmental, social, and governance factors have a major beneficial influence on performance. However, when taken into account one at a time, ESG disclosures have different relationships with one another. The results of this research might be incorporated into a workable model that financial institutions all around the globe could use to concentrate on the role that environmental, social, and governance (ESG) transparency plays in performance.