The primary objective of this dissertation is to examine the influence of environmental, social, and governance (ESG) factors on the financial performance of a selected group of Chinese companies listed on the stock exchange. The results indicate a negative relationship between a firm's ESG performance and overall performance, suggesting that higher ESG performance is associated with worse firm performance. Furthermore, a considerable negative association exists between company performance and the environmental, social, and governance pillars. Upon further examination, the underlying cause for this outcome could be attributed to the company's allocation of resources towards environmental, social, and governance (ESG) initiatives. This investment incurs additional costs, but it is difficult for this expenditure to pay off in the short term. This situation contributes to a decline in the corporation's overall performance. Hence, corporations must prioritize long-term profitability and redirect their focus from immediate financial benefits to enduring social responsibility and sustainability commitments. Companies can incorporate environmental, social, and governance (ESG) plans into their fundamental business strategy to guarantee that ESG objectives align with their long-term goals. This practice aids in the prevention of supplementary expenses.