The integration of environmental, social, and governance metrics and market value: A multi-dimensional analysis of corporate sustainability and financial performance

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Abstract

This study examines the relationship between environmental, social, and governance (ESG) practices and financial performance among Hong Kong’s Hang Seng Index (HSI) firms, addressing sector-specific and regional ESG gaps in Asian markets. While prior studies emphasise ESG’s financial impacts in Western contexts (Al Farooque et al., 2022; Askarany & Xin, 2024), Asian dynamics remain underexplored. Using panel data analysis of 83 HSI-listed firms (2019–2024), this research applies legitimacy theory to evaluate how ESG disclosures and sectoral challenges, including Hong Kong Exchanges and Clearing Limited’s (HKEX) 2020 reporting mandates, affect financial outcomes (return on assets [ROA] and Tobin’s Q). Results show robust social performance consistency (CV = 0.09–0.12) across sectors, contrasting with environmental variability (CV = 0.17–0.32), indicating varying sustainability maturity. The commercial sector achieved superior returns (ROA = 11.91 per cent), while utilities demonstrated balanced ESG integration. Findings highlight the need for sector-specific ESG standardisation and regulatory compliance to improve governance. This study provides actionable insights for policymakers refining disclosure frameworks and corporations aligning sustainability strategies with profitability in emerging markets.

Keywords: Environmental, Social, and Governance (ESG), Corporate Financial Performance, Sustainability Metrics, Cross-Sectoral Analysis, Environmental Accounting, Corporate Governance, Market Value, Panel Data Analysis, Environmental Performance, Listed Companies

Authors’ individual contribution: Conceptualization — P.C.W.Y.; Methodology — P.C.W.Y. and T.T.K.Y.; Validation — P.C.W.Y. and T.T.K.Y.; Formal Analysis — P.C.W.Y. and T.T.K.Y.; Investigation — P.C.W.Y. and T.T.K.Y.; Writing — Original Draft — P.C.W.Y. and E.P.; Writing — Review & Editing — P.C.W.Y. and E.P.; Visualization — P.C.W.Y. and E.P.; Supervision — P.C.W.Y.; Project Administration — P.C.W.Y. and E.P.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: G30, G32, G34, M14, M41, Q56

Received: 19.02.2025
Revised: 09.04.2025; 31.07.2025
Accepted: 18.08.2025
Published online: 20.08.2025

How to cite this paper: Yip, P. C. W., Pang, E., & Yu, T. T. K. (2025). The integration of environmental, social, and governance metrics and market value: A multi-dimensional analysis of corporate sustainability and financial performance. Corporate Governance and Sustainability Review, 9(3), 145–154. https://doi.org/10.22495/cgsrv9i3p12