Environmental, Social, and Governance Practices and Financial Performance of U.S. Companies

This study examines the relationship between Environmental, Social, and Governance (ESG) practices and the financial performance of companies in the United States. The study is motivated by the increasing global emphasis on sustainability, ethical corporate behaviour, and responsible governance practices among firms. The research adopts a quantitative research methodology based on the positivist philosophy and utilizes secondary data obtained from sustainability reports, annual reports, and ESG databases of selected U.S. companies. Financial performance was measured using Return on Assets (ROA), while ESG performance was evaluated through environmental, social, and governance indicators. Descriptive statistics, correlation analysis, and regression analysis were employed to analyse the relationship between the variables. The findings reveal that environmental practices have a positive and statistically significant relationship with financial performance, indicating that firms with stronger environmental sustainability initiatives tend to achieve higher profitability. Social practices showed a positive but insignificant relationship with profitability, while governance practices exhibited a weak negative and insignificant relationship. Furthermore, efficient working capital management significantly improved profitability. The study concludes that ESG practices, particularly environmental sustainability initiatives, play an important role in enhancing long-term financial performance and organizational sustainability among U.S. companies.