The Impact of Corporate Sustainability Performance on the Financial Performance of Pakistani Manufacturing Firms: Evidence from GMM System

The purpose of this study is to investigate the impact of corporate sustainability performance (SP) on the financial performance (FP) of non-financial manufacturing firms in Pakistan. The relationship between SP and FP is still unclear and the manufacturing sector facing some issues about sustainability, that ultimately affect their performance. Quantitative data from eight years of 65 sample firms listed at the Pakistan Stock Exchange (PSX) is collected from annual reports. 2016 was selected due to the Sustainable Development Goals (SDGs) 2030 issued by the United Nations (UN) in 2015. SP is measured through the global reporting indicator (GRI). SP is measured through the content analysis and index created. FP is measured through return on assets (ROA) and return on equity (ROE). Firm size (FS) and total debt to total assets (TDTA) are used as control variables. For analysis generalized moment method (GMM) system is employed. Findings show that SP has a positive significant effect on FP. The resource-based view (RBV) theory supports these findings. According to researchers' knowledge, this is the pioneer study conducted on Pakistani manufacturing firms and employed the GMM model. The findings contribute significantly to the policy implications for the creation of sustainability to improve their FP.