The Role of Sustainability Performance on Financial Resilience During Crisis

The aim of this study is to investigate the association between sustainability performance (which is proxied by ESG score) and a firm's financial resilience in crisis conditions. This study is triggered in response to the COVID-19 pandemic as a global crisis setting. By focusing on five ASEAN countries, namely Indonesia, Malaysia, Singapore, Thailand, and the Philippines, this study argues that companies with higher ESG performance will be more financially resilient during a crisis. This study uses several measurements of the company's financial resilience, both measures that utilize share prices and financial ratios from financial statements. The results show that ESG performance is negatively associated with financial resilience. ESG performance is considered less valuable during a crisis because ESG activities consume the company's financial resources. It implies that survival is more important than sustainability during times of crisis. ESG performance is considered to consume a company's financial resources in times of crisis.