ESG Practices and Financial Performance With the Moderating Role of the Sustainability Committee

ABSTRACT

This paper examines whether sustainability committee presence strengthens the association between ESG practices and corporate financial performance. Drawing on stakeholder theory and agency theory, the paper argues that ESG practices may be financially relevant when supported by board‐level monitoring, but may remain symbolic when oversight is weak. Using an international panel of publicly listed firms from Africa, Asia, Europe, North America, South America and Australia over 2015–2024, the analysis applies baseline and moderation panel models with industry, year and country fixed effects. Corporate financial performance is measured using return on assets, return on equity and Tobin's Q. ESG practices are measured using Bloomberg ESG scores and pillar scores. The findings show that ESG practices are positively associated with financial performance, with stronger evidence for return on assets and Tobin's Q than for return on equity. The ESG × SCOM interaction is positive, although its statistical significance varies across financial performance measures and model specifications, providing cautious support for the moderating role of sustainability committee presence.