The Impact of ESG Policies of Enterprises on Internal Rate of Return

Environmental, Social, and Governance (ESG) is an investment strategy and corporate assessment framework that emphasizes the impact of enterprises on the environment, society, and governance. Its objective is to assess companies' performance and non-financial risks in relation to sustainable development. The internal rate of return (IRR) is the rate at which the project's cash flow is equal to zero. The objective of this study was to examine the correlation between an enterprise's ESG score and its IRR. This work utilizes quantitative analysis and multiple linear regression approaches, building upon earlier research that has examined the relationship between ESG factors and financial indicators. This research used Excel 2018 to do regression analysis on ESG and IRR, building upon the findings of prior studies. The research findings indicate a strong negative linear link between a company's IRR and its ESG rating, as well as its overall revenue growth rate. However, the total profit growth rate shows no significant correlation. Moreover, this study discovered that the overall rate of revenue growth has a more significant influence on the firm's IRR compared to the rate of ESG factors. This report presents a divergent finding from the bulk of other studies, offering a novel research avenue for examining the influence of ESG on financial performance.