Role Of ESG Assimilation In Corporate Financial Performance And Sustainability: Power And Energy Sec

Role Of ESG Assimilation In Corporate Financial Performance And Sustainability: Power And Energy Sector

Sushmita Dhar, BSc. Geography, H.P University, Shimla

LLB, O.P Jindal Global University, Sonipat, Haryana LLM (Corporate & Financial Law & Policy), O.P Jindal Global University, Sonipat, Haryana

ABSTRACT

In recent times, the debate around profitability, sustainability and environmental damage caused by the companies from power and energy sector has been a subject of scrutiny. However, if we analyse deeply with respect to such issues then there is a possibility towards a solution that could potentially protect from environmental and social damages as well as show profitability for the companies from this sector. Due to a shift in the mentality of major investors from around the world towards a more sustainable and environmental friendly approach rather than just simple profit growth, it has become vital for the companies to be cautious with respect to their CSR (Corporate Social Responsibility) and ESG (Environment, Social, Governance) policies. If they do not come up with strategies to assimilate ESG into their company policies then they risk losing major investors, thus endangering the very existence and growth of such companies. This research paper seeks to show that ESG, rather than being detrimental towards profitability of such companies, could actually go hand in hand with financial performance of such companies. Incorporating progressive ESG policies within the operations of such companies could have a positive impact towards growth and sustainability of such companies and all the stakeholders. The paper also discusses various governmental policies and setups with regards to CSR and ESG, both spatially and temporally. The paper further shows evidence that by incorporating ESG into the companies’ primary operations rather than just treating them as secondary, how their financial performances can be good and help them grow and be more sustainable. The paper discuses legal framework across the globe when it comes to ESG and growth, providing a comparative outlook between India and the rest of the world. A direct and positive co-relation or linkage is established between ESG and CFP (Corporate Financial Performance) and the value of the companies, particularly for corporations in Power and Energy sector.