Impact of ESG (Environmental, Social, Governance) Practices on Financial Performance of Listed Indian Companies

The growing importance of Environmental, Social and Governance (ESG) practices has transformed corporate performance evaluation from a purely financial exercise into a broader assessment of sustainability, risk management, stakeholder responsibility and long-term value creation. In India, this shift has become stronger after the Securities and Exchange Board of India (SEBI) introduced the Business Responsibility and Sustainability Report (BRSR) framework for listed entities. From FY 2023-24, the top 1,000 listed entities by market capitalisation are required to disclose ESG information in the updated BRSR format, while reasonable assurance of BRSR Core is being implemented through a phased glide path from the top 150 companies in FY 2023-24 to the top 1,000 companies by FY 2026-27 (Securities and Exchange Board of India [SEBI], 2023). This paper examines the impact of ESG practices on the financial performance of listed Indian companies using secondary data, recent regulatory developments, and company-level examples from Infosys, Tata Consultancy Services, Reliance Industries and Hindustan Unilever. The analysis shows that ESG practices can positively influence financial performance through operational efficiency; brand reputation, lower regulatory risk, access to sustainable finance, employee productivity and investor confidence. However, the relationship is not automatic; it differs across sectors, depends on the quality of ESG implementation, and may involve short-term costs before long-term benefits are realised.