Investigate the Impact of ESG (Environmental, Social, Governance) Factors on Corporate Financial performance: Evidence from the Banking sector of Pakistan

Abstract

This study has aimed to investigate the impact of ESG (environmental, social, governance) factors on corporate financial performance of the banking sector of Pakistan. The independent variables in this study are social, governance, and environmental factors. Corporate financial performance is seen as a dependent variable, and return on equity (ROE) and return on assets (ROA) are metrics used to measure it. As control variables, leverage and firm age are taken into consideration. The banks in Pakistan have been selected to evaluate the correlation between the variables in this study. Information about the variables of this study was gathered from secondary sources (annual financial statements) between 2005 and 2024. Pakistani 25 commercial and Islamic banks have been used for analysis. The Collected data has then been analyzed through statistical instruments such as correlation and regression by using Stata. Based on the findings, it has been concluded that ESG has a significant impact on financial performance.