Evidence of the Ιmpact of ESG Disclosures on Financial Performance Comes from Companies Listed on the London Stock Exchange's FTSE100

Adel Necib and Anis Jarboui

International Journal of Economics & Business Administration (IJEBA), 2025, vol. XIII, issue 2, 204-216

Abstract: Purpose: Due to a global emphasis on sustainability, investors and other stakeholders now consider companies' transparency in ESG practices to be a critical factor. This study looks at how environmental, social, and governance (ESG) disclosures affect the financial performance of companies listed on the London Stock Exchange's FTSE100. Design/Methodology/Approach: This study uses a dynamic Generalised Method of Moments (GMM) approach to address endogeneity issues and assess the relationship between ESG disclosure and financial performance indicators, such as return on assets (ROA), return on equity (ROE), and market value. Findings: The results of analysing panel issue data from FTSE100 companies between 2015 and 2023 show that businesses with strong historical performance have a tendency to maintain their profitability. Additionally, ESG disclosure improves investor confidence and risk management, which has a favorable impact on financial results. Large corporations benefit from economies of scale, while excessive leverage reduces rentability. For instance, the expansion of the PIB is also essential to boosting an organization's profitability. Practical Implications: It is imperative that policies enforce ESG disclosure frameworks, encourage sustainable practices, and provide financial assistance to small businesses. Originality value: Encouraging responsible credit management and ensuring macroeconomic stability through advantageous commercial policies will also help to boost an organization's profitability and long-term economic growth.

Keywords: Sustainability; ESG; financial performance; FTSE100; panel data. (search for similar items in EconPapers)
JEL-codes: C33 G30 G32 M14 Q56 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:ers:ijebaa:v:xiii:y:2025:i:2:p:204-216

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