Green initiatives towards better financial performance of shariah public listed companies in Malaysia

This study aims to analyze the impact of green initiatives on the financial performance of Shariah-compliant companies listed on Bursa Malaysia. Shariah-compliant firms bear a greater responsibility in adopting sustainability practices, in alignment with Islamic principles that emphasize social justice, environmental preservation, and financial transparency. However, despite the widespread adoption of Environmental, Social, and Governance (ESG) standards, challenges remain in ensuring that green strategies yield tangible financial benefits. This research employs a Random Effect Model (REM) in panel data regression analysis to examine the relationship between ESG, green accounting, and Corporate Social Responsibility (CSR) with financial performance, measured through Return on Assets (ROA) and Return on Equity (ROE). The data is collected from the annual reports of Shariah-compliant firms listed in the FTSE4GOOD Bursa Malaysia Index 2019-2023. Additionally, moderating variables such as firm size and industry type are analyzed to assess their influence on these relationships. The findings indicate that the implementation of green accounting in Shariah-compliant firms contributes to improved operational efficiency and resource management. However, ESG and CSR adoption often face significant cost barriers and a lack of long-term incentives. Further analysis reveals that firm characteristics, including size and industry type, play a moderating role in the relationship between sustainability strategies and financial performance.