The impact of ESG Practice on Firm Performance in ASEAN Countries

Abstract This research paper looks at the links between ESG (Environmental, Social, and Governance) practices and company financial performance among three emerging economies, Vietnam, Malaysia and Thailand. The research outlines potential pathways through which ESG implementation will contribute to profit generation and sustainable growth in these markets. Using pooled OLS, fixed effect, and random effect models in conjunction with dynamic panel regression models we show a positive and significant relationship between ESG performance and company financial performance. The financial indicators we use in our analysis, Return on Assets (ROA) and Return on Equity (ROE) shows that companies that are performing better in ESG performance have better financial performance. While employing both static and dynamic models we provide robust evidence that ESG enhances performance for companies in Southeast Asian economies. The research has practical implications for policy makers, business leaders and investors interested in understanding the integration of ESG factors into business strategic approaches and investors decision making approaches, especially as these emerging economies continue to work towards sustainable growth. JEL Classification: L25; Q56; C32; C33. JEL code: H20; H24