The impact of ESG scores on the financial profitability of companies in the automotive industry | |
| Author | Shrestha, Nixie |
| Call Number | AIT RSPR no.SM-24-06 |
| Subject(s) | Automobile industry and trade |
| Note | A research submitted in partial fulfillment of the requirements for the degree of Master of Science in International Finance |
| Publisher | Asian Institute of Technology |
| Series Statement | Research studies project report ; no. SM-24-06 |
| Abstract | This research investigates the correlation between Environmental, Social, and Governance (ESG) scores and Financial Performance Metrics (FPM)—Return on Assets (ROA), Gross Profit Margin (GPM), and Beta—in the automotive industry during the years 2023 to 2018, utilizing a deductive approach to develop a theoretical framework. The study reveals a modest but positive correlation between ESG scores and ROA (correlation coefficient of 0.14, p-value: 0.01), GPM (0.01, p-value: 0.86), and Beta (0.01, p-value: 0.95) suggesting that higher ESG scores present financial performance benefits with ROA having the strongest correlation. Among the individual ESG dimensions, Governance (G) exhibits the most substantial influence on financial performance, with a correlation coefficient of 0.20 with ROA. Furthermore, the analysis indicates a significant correlation between the current year’s ESG and the previous year's FPMs, particularly a strong negative correlation with Beta (-0.29, p-value: 0.00), having a very strong correlation result alongside p-value support than comparing it with the current year’s financial performance measurement. This insight clarifies that ESG scores are more reflective of past financial performance than of the current year's financial metrics, underscoring the potential importance of a forward-looking approach when using ESG data for making strategic decisions. This research contributes to the existing research on the interplay between financial health and sustainable business practices, highlighting the strategic importance of ESG in the automotive industry. |
| Year | 2024 |
| Corresponding Series Added Entry | Asian Institute of Technology. Research studies project report ; no. SM-24-06 |
| Type | Research Study Project Report (RSPR) |
| School | School of Management |
| Department | Other Field of Studies (No Department) |
| Academic Program/FoS | Master of Science in International Finance (M/Msc IF) |
| Chairperson(s) | Endress,Tobias |
| Examination Committee(s) | Levermore, Roger;French, Joseph Jorome |
| Scholarship Donor(s) | AIT Scholarships |
| Degree | Research Studies Project Report (M. Sc.) - Asian Institute of Technology, 202 |
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