Impact of Green Tax Incentives on Corporate ESG Performance

1.1 Background of the Study In the last decade or so, there has been increased pressure on business firms not just to consider profitability but to act responsibly to society and the environment as well. That's where ESG – Environmental, Social, and Governance – performance is in. It's a measurement of how a firm is performing regarding its influence on the environment, its people (employees, customers, society), and governance (regulations, ethics, openness). While that is happening, governments everywhere, including India, are implementing green tax incentives to nudge businesses toward greener measures. These include tax credits, rebates, and deductions to firms that make investments in clean energy, pollution reduction, waste reduction, and other green activities. The intention behind these incentives is to lower environmental damage while making it economically beneficial for firms to go greener. For instance, if a firm puts up solar panels, it could receive a tax deduction. This benefits the firm financially and the environment simultaneously. 1.2 Importance of the Study This research is significant because it teaches us how government financial incentives such as tax rebates and deductions can make firms more environmentally and socially responsible. ESG performance is the most important consideration in the business world today. Investors, consumers, and regulators alike are all observing how the companies deal with their environmental footprint, social responsibilities, and governance practices. Strong ESG performance is seen to make the companies look more dependable, sustainable, and future-proof. Simultaneously, green tax incentives are among the primary instruments used by governments to encourage businesses to adopt cleaner and more sustainable methodologies. Yet we don't yet know how powerful these incentives are in triggering actual behavior and change. This research matters because: 1. It assists in evaluating how cognizant businesses are regarding green tax incentives and if they are applying them. 2. It investigates whether such incentives, in fact, make a difference on ESG-related decisions—such as lowering pollution, increasing energy efficiency, or increasing openness. 3. It assists policymakers in determining whether current policies are effective, or they must create more effective incentives in order to inspire sustainability. 4. It aids companies in understanding the value of integrating their financial choices with ESG objectives. 5. It benefits research by linking two significant fields: tax policy and corporate sustainability.