Sustainability as a Profit Driver: Analyzing the ROI of ESG Investments in Emerging Markets

Armaan Sundaramurthy

Abstract: This paper investigates whether environmental, social, and governance (ESG) investments act as profit drivers for firms in emerging markets. Using a multi-method empirical approach-combining cross-sectional and panel regressions, difference-in-differences (DiD) analysis around ESG adoption events, and an event-study for green bond issuances - the study quantifies the short- and medium-term ROI of corporate ESG investments. We assemble a dataset of publicly listed firms across major emerging market exchanges from 2010?2024, integrating firm-level financials, ESG ratings, green bond issuance data, and country-level institutional controls. Our hypotheses test whether (1) higher ESG scores are associated with superior risk-adjusted returns and profitability; (2) ESG upgrades and green bond issues yield positive announcement-period abnormal returns; and (3) the magnitude of ROI varies with institutional depth, disclosure quality, and sectoral exposure. The paper contributes causal evidence on ESG?s financial payoffs in markets where data and institutional frameworks differ markedly from developed markets, with policy and managerial recommendations for emerging-market firms and investors.

Keywords: ESG investments, emerging markets, sustainable finance, return on investment (ROI), firm performance, green bonds, corporate governance, event study, difference-in-differences

How to Cite?: Armaan Sundaramurthy, "Sustainability as a Profit Driver: Analyzing the ROI of ESG Investments in Emerging Markets", Volume 14 Issue 11, November 2025, International Journal of Science and Research (IJSR), Pages: 909-911, https://www.ijsr.net/getabstract.php?paperid=SR251111121611, DOI: https://dx.doi.org/10.21275/SR251111121611