Influence of ESG Scores on Firm Performance: Evidence from CRISIL-Listed Companies in India

Integrating sustainability into companies’ business strategies requires managers to incorporate sustainable goals aimed at enhancing the organizations profitability. The implementation of environmental, social and governance (ESG) aims to achieve sustainable long-term objectives in the economic and financial activities of the companies. Even though the companies are spending huge amounts on ESG practices to achieve corporate responsibilities, they have to improve stakeholders’ interest, business management, and environmental development to get a competitive advantage by valuation creation. The aim of this research is to assess the impact of environmental score, social score, and governance score on the profitability of CRISIL listed companies in India using multiple regression analysis. The data has been collected using ESG scores from CRISIL, firm size (log of assets), and profit from Capitaline examined through secondary data collection methods. The result indicates a strong relationship between the profit and ESG scores, which is measured by an R value of 61.4 percent. Thus, ESG scores were positively effects on the profitability of the companies. Companies must aim to achieve higher ESG scores to get economic and environmental benefits.