Analysis of Environment, Social and Governance (ESG) Ratings and Financial Performance in Indian Firms: A Panel Data Study

This research examines the link between Indian companies' income and Environmental, Social, and Governance (ESG) ratings between 2014 and 2024. The study assesses how differences in ESG ratings affect financial performance using panel data regression analysis, which includes fixed effects and random effects models, as well as the Hausman test. The research provides a ten-year perspective on this dynamic by using sales data and ESG rankings that are collected from MoneyControl and Yahoo Finance, respectively. The results show a statistically significant negative relationship between revenue and ESG ratings, with a higher ESG score being correlated with lower income. This implies that even while businesses engage in sustainable practices, there's a chance that these initiatives won't always result in quick financial rewards. The research provides insights into the possible trade-offs between sustainability and profitability in the Indian environment and emphasizes the need of taking firm-specific aspects into account when assessing the effect of ESG activities.