ESG Management Practices and Firm Financial Performance

Abstract

Environmental, Social, and Governance (ESG) factors are increasingly shaping corporate strategies and investor decisions. This study examines the relationship between ESG management practices and firm financial performance in publicly traded companies across Europe, North America, and Asia. Using a dataset of 300 firms over five years, the research finds that companies with strong ESG integration experience higher profitability, lower operational risks, and enhanced stakeholder trust. ESG practices such as carbon reduction initiatives, diversity programs, and transparent governance positively correlate with long-term financial performance. The study provides strategic guidance for managers seeking to align sustainability objectives with business value creation and demonstrates that ESG is not just ethical but economically advantageous.