The influence of environmental, social and governance practices on financial performance of listed firms in Nigeria

The aim of this study is to assess the influence of environmental, social and governance practices on financial performance of financial and non-financial listed firms in Nigeria. To fulfil its objectives, the study extracted data of 26 companies listed in Nigerian stock exchange for the period of 5 years ranging from 2018 to 2022. Both accounting and market-based indicators, particularly ROA and ROE, were used to measure financial performance of the selected firms. Simultaneous regression models were used to analyse the data. The analyses revealed that combined ESG practices had a non-significant impact on ROA, while, a significant positive relationship with ROE was found to exist. The study also examined the impact of individual indicators, namely environmental, social and governance practices on financial performance of the firms. It was found that environmental and social practices had a positive and significant influence on financial performance, whereas there was no significant relationship between governance practices with ROA and an inversely significance relationship with ROE. The findings of this study contribute to the existing literature that might be helpful for the policy and decision makers to focus on ESG practices for the betterment of both financial and non-financial firms in Nigeria