Does sustainability performance impact financial performance? Evidence from Indian service sector firms

Abstract The present scenario of growth and development is focused on sustainable development. It can be sustainable only if it does not focus on profit maximization at any cost but also maximizes the interests and value addition of various stakeholders by not affecting the environment and natural resources. This paper examines the impact of the firm's sustainable performance on the financial performance of service sector companies listed on the Bombay Stock Exchange. The study outcomes indicate a significant negative relationship between the Environment score with Return on Assets (ROA) and Return on capital employed (ROCE) of the selected companies. In contrast, only the Social score shows a significant negative association with the Return on equity. Environmental, social, and governance combined score is also negatively significant with the ROA and ROCE. The practical implications of the study would help academicians, business entities, corporates, policymakers, regulatory authorities, and governments to understand the relationship better. It can also help and motivate organizations to operate more efficiently and implement sustainable approaches, especially in rapidly emerging economies like India.