ESG and Pakistan: the good and the bad
The world is more susceptible to extreme natural disasters and environmental issues; therefore, the business landscape in Pakistan must evolve while remaining environmentally conscious. Firms must incorporate sustainability strategies into their planning and instil actions that make them more economically and environmentally resilient. This study aims to conduct a sector-wise analysis of the environmental, social, and governance (ESG) measures and their effect on the stock performance of 101 firms listed on the Pakistan Stock Exchange from 2009 to 2019. For this purpose, the study constructs an ESG index and employs the GMM technique to examine the effect of ESG factors on the firm's stock performance. Using profitability measures, ESG combined and separate scores with a period lag show a positive but weak significant coefficient. Considering the firm value, the ESG combined and separate scores with a period lag positively influence Tobin's Q, except for environmental factors. Considering the weighted average cost of capital (WACC) and ESG linkages, the ESG combined and separate scores with a period lag influence WACC negatively except for social factors. The study's findings are consistent with the previous literature, which supports the catalyst effect of ESG compliance on the performance of firms.
Authors
- Olan Naz
- Muhammad Zubair Mumtaz
Institutions
- University of Bahrain (BH)
- National University of Sciences and Technology (PK)
Publication Details
- Journal
- Afro-Asian J of Finance and Accounting
- Published
- 2025-12-19
- DOI
- https://doi.org/10.1504/aajfa.2026.150616
- Primary Topic
- Corporate Social Responsibility Reporting
- Type
- article
- Field-Weighted Citation Impact
- 0.00