This study aims to investigate the impact of Environmental, Social, and Governance (ESG) reporting on the financial performance of Indian energy firms. It seeks to address the existing research gap by examining how ESG disclosures influence key financial outcomes in one of the most ESG-sensitive industries. The analysis covers all energy sector companies listed on the BSE Sustainability Index, along with an equal number of energy sector firms from the BSE 500 Index, over the period 2015–2023. A quantitative explanatory approach is applied, employing panel data analysis to measure the effect of overall ESG scores, as well as individual ESG components Environmental (E), Social (S), and Governance (G) on financial performance indicators including Return on Assets (ROA), Return on Equity (ROE), and Earnings Per Share (EPS). Firm age, size, and leverage are incorporated as control variables. The results demonstrate that overall ESG performance has a significant and positive impact on financial indicators. Among the dimensions, Environmental and Governance factors show particularly strong positive associations with ROA and ROE, while the Social dimension, though weaker, also exhibits a positive relationship. The findings underline the strategic importance of ESG integration for firms in the energy sector, suggesting that enhanced ESG practices contribute to long-term financial sustainability.
Chakraborty et al. (Thu,) studied this question.