Research on the Impact of ESG Investment on Corporate Financial Performance

Jiayi Pan

doi:10.54097/brqvgt30

Authors

Jiayi Pan

DOI:

https://doi.org/10.54097/brqvgt30

Keywords:

ESG investment; financial performance; sustainable development; financial flexibility; management innovation.

Abstract

This study examines the impact of ESG investment on corporate financial performance across different industries. It explores the relationship between the stakeholder theory, sustainable development theory and ESG, revealing that long-term ESG resource allocation—distinct from discretionary CSR—needs supply-chain coordination and attention to economic, environmental and social sustainability. This research shows a positive cyclical relationship between ESG performance and financial indicators (ROA, ROE), with financial flexibility aiding ESG investment realization. The research indicates that ESG investment enhances positive role in enhancing the profitability and operational capabilities, but has limited impact on debt repayment risk mitigation. To achieve ESG investment, it is necessary to formulate the correct strategic policies and ensure that factors such as technology, funds, laws, and human resources are all in place and meet the requirements. Finally, the article specifically outlines the advantages and disadvantages of ESG investment, helping enterprises make a judgment on whether they need to engage in ESG investment based on their own circumstances. This paper, based on previous theoretical analysis and empirical studies, provides new support for ESG investment to become a criterion for managers' investment decisions and a means of management innovation.

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