Evaluating the Impact of Sustainable Finance on Financial Stability: The Mediating Role of ESG in Pakistan’s Cement Sector

Abstract

The current paper examines the impact of sustainable finance on the financial performance of firms in the cement industry of Pakistan with a focus on the mediating role of ESG factors. The cement sector industry already associated with environmental issues has come under pressure to take environmentally friendly measures that are in consonance with the international environmental and economic goals. Sustainable finance, the practice of financing sustainable initiatives, presupposes the improvement, not only of the stability of certain industries but also of corporations more broadly. This research adopts a cross- sectional research design using quantitative technique, and the data is collected from firms listed on the Pakistan Stock Exchange. The research aims at understanding the significant between sustainable operations financing like Environment and social investment and the sustainable financial performance like Return on Assets (ROA), Return on Equity (ROE) and Earning per share (EPS). This paper considers how ESG performance moderates this relationship and enhances the connection between firm performance and organizational-shaping resources. These results suggest that ESG performance is positively associated with higher financial performance, which underlines the importance of ESG factors in driving the successful results of sustainable finance. Finding of this study increases the understanding of the relationship between sustainable finance and ESG performance for corporate executives and policymakers in the cement industry. This highlights the role of sustainable finance both in mitigating global environmental and social risks and supporting the sustainable financial performance of enterprises of industries that depend on resources