“Impact of ESG Performance on Firm Financial Outcomes: Evidence from Secondary Data Analysis”

Abstract

Environmental, Social, and Governance (ESG) performance has emerged as a critical determinant of corporate sustainability and long-term value creation, attracting growing attention from investors, regulators, and scholars. This study examines the impact of ESG performance on firm financial outcomes using secondary data drawn from publicly available ESG databases and financial statements of listed firms. By integrating ESG scores with key financial indicators such as return on assets, return on equity, market valuation, and stock returns, the study explores whether superior ESG practices translate into measurable financial benefits. The analysis is grounded in stakeholder theory and legitimacy theory, which suggest that responsible corporate behavior enhances firm reputation, operational efficiency, and risk management. Empirical evidence from prior studies indicates a predominantly positive relationship between ESG performance and financial outcomes, although variations exist across industries and regions. The findings of this study reinforce the argument that firms with stronger ESG performance tend to exhibit improved profitability, lower risk exposure, and enhanced investor confidence. The study contributes to the existing literature by consolidating evidence from secondary data and offering insights relevant to policymakers, investors, and corporate managers seeking to align financial performance with sustainable business practices.