Cultivating Sustainable Wealth: Unraveling the Impact of Corporate Sustainability Performance on Shareholders' Returns in the Indian Context

The recent surge in research studies has emphasized the significance of corporate sustainability performance, depicted by ESG scores, and its bearing on various facets of firms. Companies have also tried to attract substantial investments by implementing sustainability initiatives, including reducing environmental impact, contributing positively to society, and establishing robust governance structures. This study employs static panel data regression models to investigate the impact of firms' sustainable performance on stock returns and dividend payouts. The analysis covers 253 listed firms on the Indian National Stock Exchange (NSE). The findings demonstrate that environmental and governance scores substantially enhance stock returns and dividend payouts, underscoring the critical impact of exemplary environmental stewardship and robust governance practices. Conversely, social scores exhibit a negative but insignificant relationship with stock returns, indicating that social initiatives are crucial for long-term sustainability and corporate reputation but may not immediately influence short-term financial gains. The study highlights that firms excelling across all ESG dimensions are better equipped to manage risks and secure financial stability. These insights are vital for executives, investors, and policymakers, underscoring the value of integrating ESG factors to drive sustainable growth and boost shareholder value.