Sustainability and financial performance relationship: international evidence, Ilker Yilmaz
Department of Accounting, College of Commerce and Business Administration
Dhofar University, Salalah
Purpose: The purpose of the article is to examine the relationship of corporate sustainability to firm financial performance by presenting international data.
Design/methodology/approach: The sample includes non-financial companies from five emerging economies known as BRICS for a five-year period of 2014–2018. The study uses the ESG (environmental, social, governance) scores from Sustainalytics database and financial data from company reports. Panel regression models are developed to figure out the relationship.
Findings: The results of the article revealed that there is a positively significant relationship between sustainability performance and financial performance. Total ESG score has produced significant results while the individual scores of environmental, social, and governance have produced insignificant results; implying that the components of total ESG score have a joint effect on the financial performance.
Practical implications: The results of the article have important practical implications for companies. Engagement in sustainable business practices will help improve the financial performance. In addition, the companies should be active in all components of sustainability.
Originality/value: The article contributed empirical evidence for sustainability-financial performance relationship by using the international evidence from five emerging economies.
Keywords: Sustainability; Financial performance; Emerging economies.
Citation: Yilmaz, I. (2021), "Sustainability and financial performance relationship: international evidence", World Journal of Entrepreneurship, Management and Sustainable Development, Vol. 17 No. 3, pp. 537-549. https://doi.org/10.1108/WJEMSD-10-2020-0133