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Abstract

The increasing significance of Environmental, Social, and Governance (ESG) performance prompted this study to influence business dynamics, especially by improving finance performance. This study examined the correlation between corporate financial performance in India and environmental, social, and governance (ESG) performance. Utilizing unbalanced panel data from 2011 to 2022 pertaining to non-financial firms registered on the National Stock Exchange. This study's positive correlation between ESG performance and financial performance is grounded in stakeholder theory and the resource-based approach.The study utilized a fixed effects regression model to account for unobserved variation between time periods and among enterprises. To mitigate potential endogeneity concerns and validate the trustworthiness of the findings, the two-stage least squares (2SLS) method is employed as an alternative estimating tool, along with a distinct assessment of the cost of equality. Moreover, heterogeneity analyses examine variations based on firm size. The results indicate a significant positive correlation between ESG performance and financing performance correlated with more noticeable advantages in bigger businesses. This indicates that business financial outcomes are improved by ESG performance. This study contributes to the existing information by emphasizing the financial advantages of ESG performance and presenting empirical data from a rising market. These findings possess practical consequences for investors, politicians, and company executives advocating for sustainability while enhancing corporate value