This study aims to examine the association between corporate sustainability initiatives and financial performance within the textile sector of Pakistan. It represents a distinctive effort to evaluate sustainability practices in a context where mandatory sustainability reporting is limited, particularly within emerging Asian markets. The study explores how textile firms engage in sustainability initiatives despite the absence of strict reporting requirements and assesses the implications of these practices for firm performance. The analysis is based on data collected from 120 textile firms listed on the Pakistan Stock Exchange (PSX) over the period 2020 to 2025. Data were compiled from multiple sources, including sustainability reports, annual reports, and publicly available disclosures on company websites, ensuring a comprehensive assessment of firms’ sustainability practices and financial outcomes. A Sustainability Reporting Index was constructed using content analysis based on 42 indicators derived from the Global Reporting Initiative (GRI) framework. The index comprises four sub-indices—environmental, social, economic, and governance—along with an overall composite sustainability index. Panel regression models were employed to analyse the impact of individual sustainability indicators and the composite index on firm financial performance. Additionally, the moderating roles of firm size and firm age were examined using the Hayes Process Model 2. The results indicate a positive and significant relationship between sustainability indicators, including the composite sustainability index, and firm financial performance. These findings highlight the importance of integrating sustainability practices into corporate strategies. The study offers valuable insights for management by emphasizing the role of sustainability in enhancing firm value and long-term performance. Furthermore, the findings provide useful implications for policymakers seeking to promote sustainable economic development through improved corporate sustainability practices.
Research on Economic & Social Development Options (RESDO) (Wed,) studied this question.