Does Environmental, Social, and Governance ( <scp>ESG</scp> ) Matter in Hard‐To‐Abate Sectors: Evidence From Emerging Asian Economies

ABSTRACT The work examines the relationship between environmental, social, and governance (ESG) scores and corporate financial performance (CFP) in hard‐to‐abate sectors (HTAS) in emerging Asian economies. Employing a robust quantitative methodology, the study critically analyzes the data of 2425 firms from HTAS. The CFP and ESG scores data were collected from the Refinitiv Eikon (REE) database for 21 emerging Asian economies from 2019 to 2024. The study considers the independent variable ESG scores and the dependent variables Current Ratio (CR) and Net Profit Margin (NPM). To explore the relationship, descriptive statistics, Pearson correlation, robust pooled ordinary least square regression (POLS), random effect model (REM), fixed effect model (FEM), and robust REM were explored in detail. The study revealed that the ESG score has a ‐ve correlation with CR (−0.088**) and NPM (−0.055*). The empirical models show that no significant relationship exists between ESG score and CFP (CR; NPM) of HTAS in emerging Asian economies. The comparative analysis of models highlights that the robust REM is an effective and reliable model. The work contributes to the stakeholder theory and shows the relationship between ESG score and CFP, specifically CR and NPM. The finding highlights that policy and decision‐makers in emerging Asian economies must pay significant attention to ESG and reassess ESG disclosure. The work also provides holistic policy and managerial insights for researchers, academicians, corporates, investors, and regulators.