Does ESG Improve Corporate Financial Performance? Evidence from Taiwan's Top ESG Firms

This study examines the impact of Environmental, Social, and Governance (ESG) performance on corporate financial performance (CFP) in Taiwan, focusing on the top ESG-performing listed non-financial firms from 2007 to 2023, as identified by Commonwealth Magazine. While ESG is widely regarded as a driver of financial success, empirical evidence remains mixed, particularly regarding the individual contributions of E, S, and G components. Using fixed-effects and dynamic panel data models, this study finds that overall ESG performance does not significantly enhance CFP. However, a more granular analysis reveals that governance (G) performance is positively associated with CFP, whereas environmental (E) and social (S) performance show no measurable impact. These findings underscore the importance of disaggregating ESG components and suggest that firms seeking financial benefits from ESG should prioritize strong governance structures over environmental or social initiatives.