International Research Journal of Education and Technology

Environmental, Social, and Governance (ESG) integration has emerged as a crucial strategic framework influencing corporate decision-making and financial outcomes globally. In India, regulatory developments such as the Business Responsibility and Sustainability Reporting (BRSR) framework and increasing investor focus on sustainable finance have accelerated ESG adoption among listed companies.

This study examines the impact of ESG integration on the financial performance of Indian firms by analysing how ESG scores and sustainability practices influence key financial indicators — Return on Assets (ROA), Return on Equity (ROE), Earnings Per Share (EPS), and stock market performance. Secondary data from publicly listed Indian companies spanning 2010–2025 were analysed using descriptive statistics, correlation analysis, multiple regression models, the Augmented Dickey-Fuller (ADF) unit root test, Johansen Cointegration analysis, and the Vector Error Correction Model (VECM).

The findings indicate that firms with higher ESG integration tend to demonstrate improved financial stability, a lower cost of capital, enhanced investor confidence, and better long-term profitability. Governance factors exerted the strongest individual influence on financial performance metrics. The cointegration results confirm a long-run equilibrium relationship between ESG scores and financial indicators. While short-term financial impact may vary depending on sector, firm size, and implementation cost, the study concludes that ESG integration is not merely a compliance requirement but a strategic tool for sustainable value creation in Indian firms.

Keywords: ESG Integration, Financial Performance, Sustainability, Corporate Governance, Indian Firms, ROA, ROE, BRSR, VECM, Sustainable Finance.