A study of relationship between ESG performance and sustainable growth
Keywords:
Environmental, Social, and Governance (ESG), Sustainable Growth Rate (SGR), ESG indicesAbstract
This study aims to examine the relationship between Environmental, Social, and Governance (ESG) performance and the sustainable growth rate (SGR) of companies. The independent variables comprise ESG indices, which include 1) inclusion in the Dow Jones Sustainability Index (DJSI), 2) inclusion in the Thailand Sustainability Investment (THSI)list, and 3) inclusion in the ESG100 index the dependent variable is the Sustainable Growth rate (SGR), measured using Higgins (1977) model. The control variables include firm size, capital structure, working capital, and return on assets. Secondary data were collected from the annual report and sustainability reports retrieved from the SETSMART database, covering the period from 2020 to 2024. The sample consisted of 1,965 firm years. Data were analyzed using multiple regression. The findings revealed that companies included in the ESG100 Index exhibited a statistically significant negative relationship with sustainable growth rate, with a lower mean SGR than non- included firms. Similarly, companies listed in the THSI had a y significant negative relationship with sustainable growth rate, showing a lower mean than unlisted companies. In contrast, inclusion in the DJSI had no statistically significant effect on sustainable growth rate. Furthermore, all control variables demonstrated statistically significant positive relationships with the sustainable growth rate.
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