Responsible profitability

The term environmental, social and governance (ESG) grabbed attention when it was introduced by UN Principles of Responsible Investment (PRI), and has become popular among the investment fraternity. The term is interchangeably used with socially responsible investment (SRI). A remarkable growth can be observed in ESG integration as a sustainable strategy globally...

The sample for a study on ESG in Indian corporates was drawn from a set of companies listed on the Bombay Stock Exchange (BSE). The top hundred companies were selected on the basis of market capitalisation because the Sebi mandated the filing of an annual business responsibility report, beginning 2012-13. Eleven banks and 7 financial institutions have been excluded....

The study constructed an ESG disclosure index to measure the companies' disclosures. Results show that only profitability measured by return on assets (ROE) and return on capital employed (ROCE) in both regression equation were positively associated with the extent of ESG disclosures. However, market performance, foreign institutional investors' stake and leverage have negative but insignificant association with ESG disclosures. Hence, the most significant variable that influences the level of ESG disclosures is profitability. It implies that higher the profitability of the firm, the higher they disclose the ESG factors.


From 'Determinants of Environmental, Social and Corporate Governance (ESG) Disclosure: A Study of Indian Companies', researchgate.net