Question

Why do you think we see a positive correlation between adherence to an ESG framework and firm financial performance? Is there causality? Which way does it flow?

Answer 1

ESG framework refers to environmental, social, and government. These are the criteria and entirely established a framework for sustainability and ethical practices for a company in financial performance.

Financial performance is a measurement of a firm how well the form using its assets from the business to generate revenues.

ESG provides future and current possible insights into environmental, social, and governance risks and opportunities, impact, and dependencies. These aspects, directly and indirectly, impact on business profit and investments.

ESG helps to attend the highest profit margin by using investment strategies by keeping in mind the environmental, social, and governance aspects.

Yes, there is causality because ESG Framework gains more recognition among types of investors and more attention of government and regulations to such factors.

By using the ESG framework, Increase the investment rise, financial strength manifests investor's commitment.

These three aspects flow its.

A company is thereby energy use, waste generation, level pollution, and resource utilization in the environmental factors.

In the social factors, any relationship with other businesses and communities, governance, internal company affairs, and relation with the company's stakeholders.