IMPACT OF ESG PERFORMANCE ON THE FINANCIAL PERFORMANCE OF DIFFERENT PAKISTANI LISTED COMPANIES WHILE MODERATING ROLE OF ENVIRONMENTAL FACTORS

Abstract

The research article aims to examine the impact of ESG performance on the financial performance of Pakistani listed companies also considering the moderating role of the environmental factors. The quantitative research design has been employed in this research article which includes the numerical analysis. Following this manner, the secondary data was collected from various sources including annual reports, Reuters, and the World Bank for the period 2010 to 2022, particularly Pakistani-listed companies registered in the Pakistan Stock Exchange (PSX). The study found that the ESG performance of Pakistani companies does not significantly impact their financial performance mainly concerning the company return on assets (ROA) while having a significant impact on return on equity (ROE). The relationship between CSR and financial performance is insignificantly moderated by CO2 emissions. It is also found that the effect of CSR measures and initiatives on Pakistani companies' financial performances is considerably not impacted by their CO2 emissions. In addition to this, CO2 was found to have an insignificantly moderate association between board independence and while partially moderate association with board size and company performance. Whereas, green emissions have a partially moderate association with CSR, board size, and board independence. The key limitation of the study is that the findings are particularly based on Pakistani-listed companies, which restricts the scope of this article.