Environmental Responsibility and Financial Performance: The Mediating Role of Sales in Korean Firms

ABSTRACT This study investigates the mediating role of sales in the relationship between environmental responsibility (ER) and financial performance (FP) through the lens of green consumerism. Using Korean ESG ratings between 2019 and 2022 and financial data from the Kis‐Value Database, we show that ER does not directly enhance FP but indirectly improves it through increased sales. This mediation effect is significant for Chaebol firms, reflecting their greater visibility and ability to convert environmental initiatives into market outcomes, while it is absent for non‐Chaebol firms. Moreover, the indirect effect becomes stronger in the post–COVID‐19 period, consistent with heightened consumer and stakeholder sensitivity to sustainability. Our findings highlight sales as a key transmission channel through which ER influences FP and underscore the role of firm characteristics and institutional context in shaping the economic returns to ER.