This paper investigates the relationship between sustainability performance, measured through environmental, social, and governance (ESG) indicators, and the stock performance of Saudi-listed firms from 2015 to 2022. The aim is to assess whether firms with higher ESG scores exhibit stronger stock returns within the Saudi market context. The analysis relies on panel data and employs pooled ordinary least squares, fixed-effects, and random-effects models to ensure a robust estimation. Across all specifications, the empirical results indicate a consistent positive association between ESG performance and stock returns, suggesting that sustainability-related practices are increasingly reflected in market valuations. The findings contribute to the expanding literature on sustainable finance in emerging markets by illustrating the developments within Saudi Arabia, a market undergoing rapid transformation under Vision 2030. This paper enhances understanding of the financial relevance of ESG performance in the region and offers timely insights for investors and market participants monitoring the integration of sustainability within Saudi Arabia’s capital market.
Alluhidan et al. (Mon,) studied this question.