Influence of GHG emissions intensity and ESG scores on the financial performance of publicly listed companies in the ASEAN Region

Background: Sustainability and environmental responsibility have become critical concerns in corporate governance, with GHG emissions intensity and ESG scores increasingly used as indicators of responsible business practices. However, their impact on financial performance remains a subject of debate, especially in ASEAN markets, where regulatory frameworks and investor priorities differ. This study aims to analyze the relationship between GHG semissions intensity, ESG scores, and financial performance (ROA and Tobin’s Q) in ASEAN public companies to assess how these sustainability metrics influence corporate success. Methods: The study employs fixed-effects panel regression analysis using data from Refinitiv Eikon on 220 ASEAN public companies from 2018 to 2022. The key variables include GHG emissions intensity and ESG scores as independent variables, with ROA and Tobin’s Q as dependent variables. Findings: The findings indicate that GHG emissions intensity has a slightly significant impact on ROA but does not significantly affect Tobin’s Q, suggesting that investors in ASEAN may not prioritize emissions data when evaluating corporate performance. This supports the notion that carbon emissions' financial impact varies by industry, and inconsistent regulations across ASEAN complicate emissions comparisons. In contrast, ESG scores exhibit a significant negative relationship with both ROA and Tobin’s Q, implying that while investors recognize ESG engagement as a governance signal, high implementation costs and delayed returns deter investment. Additionally, risks such as greenwashing and inconsistent ESG reporting standards further undermine the credibility of ESG metrics in ASEAN markets. Conclusion: While GHG emissions intensity shows minimal influence on profitability, ESG engagement, despite its long-term benefits, presents short-term financial challenges. The findings underscore the importance of aligning ESG efforts with corporate strategy and standardizing ESG reporting frameworks across ASEAN to enhance investor confidence. Novelty/Originality of this article: This study contributes to the ongoing discourse on sustainability and corporate performance by specifically examining ASEAN markets, which have diverse regulatory environments and investor behaviors.