ESG Performance and its Role in Easing Financial Constraints of Pakistan’s Agricultural Sector:The Mediating Impact of Information Asymmetry

Abstract

This study highlights the mediating function of information asymmetry as it investigates the relationship between financial restrictions in Pakistan's agriculture sector and Environmental, Social, and Governance (ESG) performance. The study investigates how ESG practices can be used as a tool to lower uncertainty, enhance information transparency, and make it easier to obtain capital in an area that is vital to Pakistan's economy. It does this by drawing on signalling theory and financial inclusion theory. The study uses a quantitative technique to examine the relationship between knowledge asymmetry, financial limitations, and ESG performance using secondary data from reliable sources. The results show that by improving transparency and demonstrating management's dedication to sustainable practices, improved ESG performance lessens financial limitations. This in turn resolves the difficulties associated with capital access in emerging economies by boosting investor trust and coordinating stakeholder interests. With an emphasis on the agricultural industry, the study adds to the little corpus of research on ESG performance in developing nations. It emphasizes how crucial ESG is as a signalling mechanism to draw in investment and enhance financial inclusion, offering useful information to firms, financial institutions, and policymakers. In order to address regional issues and advance sustainable development in Pakistan's agricultural sector, the research promotes customized ESG frameworks.