Examining the influence of ESG performance on operational efficiency in firms: evidence from Asia – Pacific region

Abstract

Nowadays, as sustainability issues garner increasing attention, companies are increasingly integrating ESG principles into their strategic frameworks. This integration not only enhances operational efficiency but also boosts competitiveness in the market. This study investigates the impact of ESG performance on operational efficiency. We gauge operational efficiency by employing metrics like return on assets (ROA) and firm value (Tobin’s Q), while evaluating environmental, social, and governance (ESG) performance entails assessing the overall ESG score and its constituent pillars through Refinitiv Eikon. The research sample comprises the 3000 largest companies by market capitalization across 10 countries in the Asia Pacific region from 2011 to 2022. The results suggest a positive correlation between profitability and ESG performance, as indicated by overall ESG scores and their respective dimensions. However, no significant relationship was observed between firm value and ESG performance.