1 Introduction

The COVID-19 pandemic has affected everywhere around the world. It has challenged the global socio-economic structures and resilience of businesses across industries [1]. This has ushered in a new era marked by a greater focus on ethical and sustainable corporate operations as well as a greater understanding of global concerns [2]. In this challenging era Environmental, social, and governance (ESG) factors have become more significant as markets struggle with the continuous difficulties and uncertainties; these factors are influencing business strategies and investment choices in a setting that is changing quickly [3]. As the world strives to recover from the economic and social impacts of the pandemic, understanding the nexus between ESG scores, firm market performance, and the moderating influence of green initiatives becomes paramount for businesses navigating an evolving landscape [4]. This research seeks to explore the intricate relationship between ESG scores and firm market performance, with a specific focus on the moderating role played by green initiatives, in the unique post-COVID era.

Environmental, social, and governance (ESG) elements have become increasingly important in business strategy, as companies work to negotiate a fast-changing social and environmental landscape in addition to recovering from the economic shocks caused by the pandemic [5, 6]. Investors, consumers, and regulators are increasingly recognizing the significance of sustainable business practices in building resilient and future-proof organizations [7]. ESG scores, encompassing environmental sustainability, social responsibility, and governance practices, have become crucial indicators of a company's ability to thrive amidst the challenges posed by the pandemic and beyond [8]. As businesses navigate the post-COVID era, understanding the intricate relationship between ESG scores and firm market performance becomes not only relevant but essential for sustainable economic recovery and growth [5].

Investors are increasingly incorporating ESG aspects into their decision-making processes since they are seen as crucial indicators of long-term value and risk management. [9]. The pandemic has caused social upheaval and economic disruptions that have changed the business environment and how stakeholders, including investors, customers, and stakeholders, assess companies [10]. It is crucial to comprehend the complex relationship that exists between firm market performance and ESG scores in this context [11]. Considering this, this study attempts to examine, within the framework of the post-COVID era, the influence of ESG scores on firm market performance, with a focus on the moderating function of green initiatives. Most of the studies have found a positive relationship between ESG and firm market performance. In polluting companies, firm market performance has been greatly influenced by the sustainability practices of firms [12].

The motivation for this research stems from the increasing demand for comprehensive insights that guide businesses in aligning their strategic goals with environmental sustainability. Investors are progressively factoring ESG considerations into their decision-making processes, thereby influencing the cost of capital and overall market valuation of firms. Moreover, regulatory bodies worldwide are intensifying their focus on sustainable business practices, reinforcing the need for companies to adopt and communicate robust ESG strategies.

The aim of the study is to examine the relationship of ESG practices on market performance with green initiatives. We argue that companies can improve their relationships with stakeholders by using both ESG disclosure and effective corporate governance as complementary strategies. Specially, this study claim that green initiatives may be function of governance this will be a part of practices of sustainability. In a departure from previous studies, we focus on Indian companies, and we address if specific directors’ characteristics affect sustainability disclosure. Along with the well-known stakeholder theory relationship between ESG initiatives and firm performance of Norwegian companies, they said that it is crucial and offer value to help all parties involved specially standard-setters and regulators who want to impose a framework that may be used to enhance ESG disclosure—understand the implications of the disclosure [9].

The paper contributes to previous literature by providing evidence that ESG disclosure affects the range of sustainability disclosures. In Specifically, we offer proof that the conventional division of directors into independent and non-independent categories falls short of accurately representing the range of functions performed by board members. Moreover, insights for practice. Result from our empirical evidence from the study, Middle East, North Africa, and Turkey (MENAT) region banks have studied, macroeconomic factors have a major influence on firm performance, ESG has a positive effect on firm performance, ESG has a negative effect on firm performance, suggesting a non-linear and concave relationship [13]. Therefore, performance of market was influenced by the ESG reporting.

To address these challenges, this paper employs a quantitative research approach, leveraging financial data, ESG scores, and green initiative metrics across a diverse sample of companies. By examining the interplay between ESG scores and market performance in the context of green initiatives, this study aims to contribute valuable insights for both academic researchers and industry practitioners.

In summary, the impact of ESG scores on firm market performance remains a critical area of investigation in the contemporary business landscape. By introducing the moderating influence of green initiatives, this research seeks to advance our understanding of the nuanced relationship between sustainability practices and financial outcomes, providing actionable insights for businesses striving to thrive in an era where responsible corporate citizenship is a prerequisite for success.

2 Theoretical background

2.1 Stakeholder theory

ESG is associated with the theory of stakeholders; it addresses how a business should act in the best interests of its internal and external stakeholders, such as suppliers, governments, and employees, in addition to the interests of its shareholders. [14]. Theoretically, businesses are driven to go to great lengths to uphold favorable opinions among their stakeholders through the provision of information [15]. The endurance of stakeholder confidence and goodwill is intricately tied to a company's disclosure of information, particularly concerning its sustainability report [16]. This disclosed information serves as a valuable resource for creditors, who leverage it to illustrate the company's stable financial situation, exemplified by its capacity to settle existing debts with current assets within a year [17]. Moreover, in alignment with Stakeholder theory, ethical and sustainable business practices are posited to mitigate the risks associated with negative social and environmental effects that could potentially harm the business [18, 19]. By adopting such practices, businesses stand to not only cultivate a commendable reputation but also foster customer loyalty, attract top-tier talent, and make decisions that prove advantageous to both the firm and society at large [20]. The culmination of these actions is anticipated to yield enduring positive impacts on the financial success of the business in the long term.

3 Literature review and hypothesis development

This research endeavors to explore the correlation between ESG (Environmental, Social, and Governance) disclosure and the profitability of Indian companies. Specifically, the study incorporates a sustainable committee as a moderating variable to analyze its influence on profitability. Prior empirical research has delved into diverse aspects of how ESG variables intersect with corporate finance and investment management.

3.1 ESG discloser and firm performance COVID 19

Research exploring the relationship between ESG disclosure and company financial success is both intricate and ongoing, marked by conflicting findings. While certain studies propose a positive correlation between ESG disclosure and firm financial performance [21], others reveal no significant relationship or even a negative one [9]. The impact of ESG disclosure on financial performance appears to be contingent on various factors, such as industry, country, and the type of ESG disclosure, contributing to the inconsistency in outcomes. For instance, Abdi (2022) investigated the relationship between ESG and firm value, incorporating the moderating role of size and age, and discovered a positive relationship. Numerous studies have delved into the connection between ESG and firm performance, consistently reporting a positive association [22].

ESG factors have the potential to influence not only a company's stock price but also various aspects of its sustainability objectives. Investors often aim to generate returns while contributing positively to the community and the environment. Some studies have explored the association between environmental initiatives and profitability, yielding mixed results. Several studies have found a negative impact, attributing it to the prolonged investment horizon required for environmental projects [22,23,24,25,26]. This negative impact is often due to the extended timeframes needed for environmental investments [23]. However, a limited number of studies have identified a positive relationship between environmental initiatives and profitability [16, 27]. This positive correlation suggests that, under certain circumstances, environmentally friendly practices can enhance a company's financial performance.The COVID-19 epidemic has led to a heightened emphasis on the significance of ESG performance in determining the resilience of firms and their financial performance [28]. This is evident in studies such as Zhang et al., discovered that businesses with higher ESG performance had less of a negative financial impact from the pandemic by lowering financial risk and increasing liquidity [29]. Additionally, Broadstock et al. discovered that higher ESG performance during the COVID-19 crisis lowered financial risk for firms [5]. Furthermore, Chen et al. demonstrated that companies with higher ESG scores in the U.S. airline industry had lower short-run stock return volatility during the pandemic, suggesting that ESG performance can offer a defines mechanism for companies. Overall, these studies provide empirical evidence that ESG performance plays a crucial role in mitigating financial risk and enhancing firm resilience during times of crisis, such as the COVID-19 pandemic. During the COVID-19 pandemic, firms with high ESG performance demonstrated greater resilience and lower downside risk.

Supporting to these studies [30] has studied examines the directional cause-and-effect link under a stochastic structural relationship programming (SSRP) model between market structure, ESG performance, and business efficiency using a sample of Brazilian listed companies. We have three types of empirical evidence. show that more efficient businesses have better environmental performance, whereas more efficient businesses have lower ESG performance and worse corporate governance standards. Another study investigates the relationship between Indian firms' operational, financial, and market-based performance and their disclosure of Environmental Social Governance (ESG). Given that the results show that ESG-related initiatives have a beneficial effect on businesses after they cross a certain threshold, significant resources and long-term planning must be allocated in this way [31].

They were able to effectively navigate the challenges caused by the pandemic, thanks to their focus on environmental sustainability, social responsibility, and strong governance practices. These findings highlight the importance of incorporating ESG considerations into business strategies, as they can help companies build resilience and navigate turbulent times.

Research context:

To promote green initiative (GI) corporate governance, the Ministry of Corporate Affairs has published circulars permitting paperless compliance by companies and indicating that notices and documents, including annual reports, can be served to members via email. In regards to electronic holdings with the Depository, members who have not yet enrolled are asked to register their email address, contact phone number, and mandate through the relevant Depository Participants [32]. [33] has studied the influence of sustainable supply chain methods on financial results, with reference to Indian businesses. They have found the During the five years that the study took into consideration, sustainable supply chain strategies that take environmental, social, and governance performances into account may not have a beneficial effect on financial performance as evaluated by Return on Asset (ROA) and Return on Equity (ROE). Similar to this study, corporate governance's role in fostering the relationship between social sustainability and overall sustainability performances as measured by ESG scores, as well as its observation of this relationship's mediating function. The results corroborate the hypotheses that explain how social sustainability affects corporate governance [34].

H1: ESG discloser has a positive and significant impact on Firm performance.

3.2 Green initiatives and ESG scores on firm market performance in COVID 19

The COVID-19 pandemic has had a profound impact on the global economy, affecting various asset classes in different ways [35]. The connection between green initiatives and ESG scores and how they affected market performance during this crisis is one topic of research. Numerous studies have demonstrated that businesses who prioritise green activities and have high ESG scores have outperformed their competitors during the COVID-19 epidemic [36]. Additionally, these studies imply that during financial crises, such the one brought on by the rapid spread of COVID-19, companies with better ESG performance have lower financial risk [2]. This demonstrates that companies that prioritise social and environmental responsibility are more resilient in times of crisis and are better equipped to withstand harsh economic times. During the COVID-19 pandemic, green initiatives and ESG scores have become significant determinants of corporate market performance. Consistent with global efforts pertaining to Environmental, Social, and Corporate Governance, the COVID-19 pandemic has underscored the significance of ESG concerns and expedited the shift towards a business model that is more robust and sustainable [36]. These results demonstrate the importance of adding ESG factors into investment plans and decision-making procedures since businesses that do well in ESG areas have a higher chance of withstanding adversity and producing long-term value for shareholders.

An entity's Environmental, Social, and Governance performance has become a crucial focus in both academic research and practical application. There is a growing body of evidence that supports the idea that environmental, social, and governance activities positively impact economic performance [37]. Furthermore, businesses that place a high priority on sustainability and integrate principles related to the environment, society, and governance into their operations typically outperform their competitors and have lower financial failure rates [26]. These findings suggest that green initiatives and ESG scores have a positive influence on firm market performance. These initiatives and scores enhance the company's reputation, leading to improved economic performance. Additionally, research has shown that disclosing ESG information and implementing sustainable practices can have a significant positive impact on firm value. Overall, the evidence suggests that green initiatives and high ESG scores contribute to a company's financial success, reputation growth, and competitive advantage. Overall, the evidence suggests that green initiatives and high ESG scores contribute to a company's financial success, reputation growth, and competitive advantage. Overall, the evidence suggests that green initiatives and high ESG scores contribute to a company's financial success, reputation growth, and competitive advantage. Overall, the evidence suggests that green initiatives and high ESG scores contribute to a company's financial success, reputation growth, and competitive advantage, as demonstrated by numerous studies and research findings.

H2: ESG discloser and green initiatives have a positive and significant impact on Firm performance.

4 Methodology

4.1 Data and sample

Regarding the mediating function of ESG performance in polluting companies, the study intends to investigate the impact of Green Initiatives on financial market performance. Based on Central Pollution Control Board (CPCB) circular No. B-29012/ESS(CPA)/2015-16, which was released on March 7, 2016, the study's polluting companies in India were selected to assess the impact. The sample was taken between the years 2019 through 2022. Determining the influence of COVID-19 on this industry was the primary goal of the study. Out of the 201 observations made by the Bombay Stock Exchange (BSE), 67 firms were chosen. Refinitiv's regular ESG scores were used to choose the companies. The company information gathered from the ProwessIQ database.

4.2 Independent variable

We employ one of the tops worldwide, all-inclusive ESG rating systems as a stand-in for a company's ESG performance. The DataStream database contains this Refinitiv ESG score. Compared to other ESG rating providers, this one has the best global coverage, which is why it was selected as the ESG data source (e.g., the SAM Corporate Sustainability Assessment or Sustainalytics) [38]. The ESG Combined score (ESGC), which combines the ESG score with the ESG Controversies score to provide an assessment of the company's sustainability impact and conduct over time, is one of the two overall ESG scores in the Refinitiv model. The ESG Score measures the company's ESG performance based on verifiable reported data in the public domain [84]. Our research's use of ESG secondary data is able to produce results that are both reliable and comparable because Refinitiv's superior technique for data collecting and processing has been applied in many other studies.

4.3 Dependent variable

Following previous studies [5, 10, 17], this study uses Tobin’s Q, a performance metric driven by the market, used to assess corporate value. Tobin's Q, which has a strong positive correlation with the relative value of the company, is computed by dividing the total liabilities and market capitalization at the end of the year by the total assets. When the accounting policy alters the enterprise's book value, Tobin's Q value remains unaffected [39].

4.4 Moderating variable

The Ministry of Corporate Affairs, Government of India, has launched the "Green Initiative" (GI), which the Company supports and welcomes as a good corporate citizen. The GI allows for the electronic delivery of documents, including the Annual Report, to shareholders at their email addresses. The Ministry of Corporate Affairs (MCA), Government of India has taken a ‘Green Initiative in the Corporate Governance’ vide its Circular Nos. 17/2011 dated 21.04.2011 and 18/2011dated 29.04.2011 which permits the organisation to send electronic notices of general meetings, extraordinary general meetings, audited financial statements, director's reports, and other documents to the email addresses that shareholders have registered with the depository participant (DP).

However, since India's green initiative implementation is still in its infancy, it is considered an independent variable and is denoted by the symbol GI. If a company implements green initiatives, it should assign GI to 1; if not, it should assign 0.

From the table 1 explanation to the control variables was below.

Table 1 The control variables are categorization
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Firm SizeThe natural logarithm of total assets is used to calculate FS. Bigger businesses prefer to perform better and make more money.

Current ratioCR is the total current assets such as cash, inventory, accounts receivable and prepaid expenses to total liabilities such as accounts payable, short-term debt, and accrued liabilities. A high current ratio indicates that companies maintain liquidity.

Debt Equity Ratio A company's total debt is compared to the equity held by its shareholders using the debt-to-equity ratio. The resulting ratio shows how leveraged and financially risky the company. A high debt-to-equity ratio indicates that debt is the primary source of funding for the business, which can both increase financial risk and potentially increase returns. Conversely, a low debt-to-equity ratio suggests less financial risk, though it might also imply lower returns.

Firm Age FA incorporates businesses and makes the assumption that businesses with a higher age typically perform better.

4.5 Model construction

To examine the connection between the financial market performance and the ESG scores to confirm Hypothesis H1. The following multiple regression model is built using the FMP as the dependent variable and the companies’ ESG scores as the independent variable.

4.5.1 Model 1

$${\text{Tobin's}} {\text{ Q }}\left( {{\text{TQ}}} \right) = \beta 0+ \beta 1 \text{ESG} + \beta {\text{ 2 CR}} + \beta 3 \text{DE} + \beta 4 \text{Age} + \beta 5 \text{Size} + \varepsilon .$$

To analyse the relationship between the following green initiatives, the ESG score, and the financial market performance of the polluting companies to verify Hypothesis H2, the FMP of the company is the dependent variable, and the ESG score is the independent variable. The following green initiative is the moderating variable, and the following multiple linear regression model is constructed:

4.5.2 Model 2

$${\text{Tobin's}} {\text{Q }}\left( {{\text{TQ}}} \right)= \beta 0 + {\text{ }}\beta 1 \text{ESG} + \beta 2\left( {{\text{ESG}}*{\text{GI}}} \right)+ \beta 3 \text{CR} + \beta 4 \text{DE} + \beta 5 \text{Age} + \beta 6 \text{Size} + \varepsilon .$$

5 Results and discussion

5.1 Descriptive statistics

Before proceeding with the regression analysis and testing the Hypotheses, the descriptive statistics for the variables are summarised. The table provides an overview of the descriptive statistics for ESG scores, FMV (Tobin’s Q), and the control variables.

As shown in the Table 2 the mean value of Tobin’s Q is 23.98 and std. dev of 20.62 indicating that there is a large difference in the values. This is an indication that the market performance of Indian polluting companies is uneven because of the lockdown effect. Independent variables ESG score which means ESG performance of polluting companies is above average. They have to improve their performance. On average, 51% of polluting companies were following green initiatives and the extreme values are 0 and 1. Control variables such as the current ratio its mean was 1.44 which describes all companies are maintaining liquid funds in their business. The debt-equity ratio average was 0.57 which is very low. It varies between -8.58 and 5.97 which describes companies mostly depending upon the equity. Many of the companies have been in the market for a long time with an average of 47.31. The size of the companies is 3.85 in million hundred which means that all polluting companies have assets.

Table 2 Descriptive statistics
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5.2 Correlation analysis

The dependent, independent, and control variables' Pearson correlation matrix is shown in Table 3. There is no multicollinearity problem between the variables. It supports the subsequential multi-linear regression analysis. In terms of variable relationships, the implementation of green initiatives in the company ESG score and FMV has passed the significance at 1% level between FMV has a positive correlation, which is constant. In the case of control variables, a higher current-asset ratio has been attracting investors; in the same way negative debt-equity ratio expresses company has more liabilities than its assets, which discourages investors. At the same time, the age of the company also played a key role in attracting investors. The size of the company could be measured by various financial metrics. Which is negatively correlated with Tobin’s Q.

Table 3 Correlation analysis
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5.3 Regression results

This section represents the findings of regression analysis of model 1 and model 2 between independent variables and dependent variables.

Table 4 presents the outcomes of the regression analysis, shedding light on the intricate relationship between Environmental, Social, and Governance (ESG) scores and firm market performance. Within this regression model, a noteworthy coefficient of 0.31 is observed for the link between ESG and firm market performance, surpassing the significance threshold at the 1% level. This compelling result suggests that companies boasting higher ESG scores exhibit a superior market value compared to their more environmentally harmful counterparts. Notably, this finding provides robust support for our initial hypothesis H1.

Table 4 The regression analysis of Model. 1
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The outcomes of the regression analysis, as detailed in Table 5, extend beyond the direct relationship between Environmental, Social, and Governance (ESG) factors and firm market performance (FP). This study further introduces Green Initiatives (GI) as a moderating variable in the context of the relationship between ESG and Tobin’s Q, proposing Hypothesis 2 (H2), positing that GI acts as a mediator between ESG and Tobin’s Q. Within the regression model, the observed regression coefficient between ESG and firm market performance, with the moderating influence of green initiatives, registers at 0.30. Although this coefficient is positive, it lacks statistical significance. This suggests that, contrary to the hypothesis, the mediating role of GI does not have a discernible impact on the relationship between ESG and firm market performance, particularly for companies with higher pollution levels. It's notable that during the COVID-19 period, green initiatives did not exhibit a significant moderating effect hence, the hypothesis H2 is rejected.

Table 5 The regression analysis of Model. 2
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6 Discussion

Table 4 describe the results align seamlessly with the conclusions drawn from several prior studies, including those conducted by [13, 21, 22, 27, 40, 41]. The consistency across these studies reinforces the idea that companies with enhanced ESG performance tend to enjoy better financial market performance, substantiating positive theories that posit an improvement in ESG positively influences stakeholder satisfaction. An intriguing insight emerges from our analysis, indicating that the heightened ESG performance is predominantly propelled by advancements in the environmental pillar. This implies that companies are making concentrated efforts to mitigate their environmental impact, evident in reduced pollution and improved energy efficiency.

Moreover, our findings illuminate a fascinating correlation between the global pandemic crisis and ESG performance. Remarkably, despite the pandemic's adverse effects on governance—a facet less directly tied to immediate stakeholder interests—companies have demonstrated resilience in prioritizing the concerns of external stakeholders. This is indicative of a strategic shift, where companies, faced with the challenges of the pandemic, actively showcase goodwill and a commitment to their moral responsibility toward stakeholders [42]. This nuanced understanding highlights a positive influence of the pandemic on both environmental and social performance within the ESG framework. Our comprehensive analysis not only substantiates the positive correlation between ESG and firm market performance but also reveals nuanced dynamics, emphasizing the pivotal role of the environmental pillar and the resilience of companies in prioritizing stakeholder interests, particularly during challenging times such as the global pandemic.

Table 5 concludes the these finding stands in contrast to previous studies, as supported by the works of [16, 32, 43] and Sahu [44]. Collectively, these studies contribute to the consensus that, despite the lack of significance in this context, green finance policies can still play a crucial role in promoting sustainability through sustainable investment practices. Interestingly, our results reveal a nuanced perspective on the impact of communication methods during crisis periods. Specifically, the data indicates that communicating through emails doesn't exert a significant influence on shareholders and fails to attract new investors to invest in polluting companies during the crisis period [45]. This finding adds a layer of complexity to the understanding of communication strategies amid crises [23].

However, it's essential to note that, beyond the scope of green initiatives, our results underscore a positive impact of ESG scores on polluting companies. This implies that, despite the challenges posed by the pandemic and the limited influence of specific moderating variables, the overall ESG performance positively contributes to the market performance of companies with a higher environmental footprint. Our research highlights the intricate dynamics between ESG factors, green initiatives, and firm market performance, emphasizing the need for a nuanced understanding of these relationships, especially in the context of external factors such as the COVID-19 crisis.

6.1 Theoretical implications

Significant new material is added to the body of literature by this investigation. Relatively little previous research has looked at how ESG performance affects businesses, particularly in times of crisis. A comprehensive ESG score might help polluting companies recruit and retain top talent, increase employee morale by giving them a sense of purpose, and increase overall performance. The study's conclusions imply that improving social responsibility, the environment, and corporate governance can all be applied to boost market performance. By applying ESG principles, businesses can gain a competitive edge over rivals in the market, enhance their reputation with employees and stakeholders, increase returns on investments, appeal to lenders and investors, improve their financial performance, and foster customer loyalty. The data shows that different countries contribute differently to ESG worldwide. Contributions fluctuate each nation and are determined by how well they are able to uphold strong ESG standards in various industrial functions. Businesses can expand into new markets, cut costs, and flourish within existing ones with the aid of an efficient ESG proposal [46]. Due to their greater resources and ability to comply with ESG regulations, larger businesses are better able to communicate their positive messages to the public and boost the adoption of their products and services. Rich countries have stricter laws governing ESG disclosure and place more value on ESG performance than do poor countries.

6.2 Practical implications

Regardless of the outcome, the economic ramifications of this endeavor encourage the progress of ESG activities. This makes it possible for the polluting businesses to maintain their sustainability, build a strong reputation, win over stakeholders, and deal with problems pertaining to the sustainable growth of the country. The report recommends that polluting organizations use the ESG maturity method to find and measure pertinent data, compare their performance, and identify data. Companies can then focus on diversity, communication, and teamwork while taking the required actions to correct flaws [47]. It appears that there is a positive feedback loop between FMV and ESG performance. The company's earnings increase when it invests in ESG initiatives, but the results also affect how committed the organization is to these initiatives. Better ESG suggestions are associated with better tilt and momentum performance of stocks. A decrease in downside risk is also linked to improved ESG performance. As to the report, the incorporation of ESG into corporate operations augments free market value (FMV) by enabling organizations to expand into new and existing markets by providing a robust ESG offering [42]. ESG can significantly cut costs as well. Increased external value proposition could reduce regulatory pressure and give firms more strategic independence. Polluting businesses that perform very well in terms of ESG metrics have higher worker productivity, better financial performance, lower organizational risk, and less information asymmetry. All these things contribute to easing external investors' worries about a company's potential for expansion, which reduces the financial limitations that companies have to deal with. The benefits of FMV in ESG.

7 Conclusion

ESG investment concepts must start to appear and flourish as economies around the world come to respect and accept the notions of sustainable development and responsible investment. In this study, a sample of 67 polluting companies over the period of 3 years 2020–2023 was used. Refinitiv’s ESG score and financial data from the ProwessIQ used to build a panel regression model. The objective of this research was to determine how ESG affected the performance of the financial markets. The research contributes to the growing corpus of literature on business success in environmentally friendly businesses by utilising the notion of ESG. Both in business and academic writing, the ESG hypothesis has a lengthy history. For almost a century, proponents of the market economy have argued that the goals of for-profit businesses should not be restricted to increasing shareholder gains. These talks were driven by progressive political ideals. This tendency started to take shape concurrently with the business community's growing demands for social responsibility, which motivated numerous managers and executives to provide a range of volunteer activities to their staff members and the communities in which they lived. Recently, the following organisations have embraced the ESG paradigm: (i) government agencies; (ii) quasi-government organisations; (iii) non-profit advocacy groups; (v) financial rating agencies; and (vi) important policy organisations, especially those connected to the UN. Numerous of these groups have made it their mission to create intricate sets of rules and evaluation criteria for all the different ESG issues that businesses are supposed to be dealing with.

7.1 Limitations and future directions apart

In addition to its contribution, this study has certain shortcomings that should be minimised in further research to produce better outcomes. Future research should consider the first finding of this study, which suggests that firms' liquidity may be influenced by ESG rating scores, market share prices, and returns on assets rather than returns on investors' investments under uncertain situations. Subsequent research may provide more clarity on this point, however investment advice services for water or carbon risk assessments are not influenced by the percentage of NGOs. Future research based on ESG assessment can make use of the data gathered in this study to examine the implications of the factors while taking into account other factors affecting the ESG rating to ascertain the overall growth rate of companies, including financial resources (investments, income-producing capacity) in relation to the economies of the respective countries.