The impact of companies' sustainability performance on their financial performance: A study on BIST 50 companies

The purpose of this research is to determine the impact of sustainability on firm performance. The research sample consists of thirty-two companies listed in the BIST 50 index, which are non-financial institutions and have access to ESG ratings. The research period covers the years 2018-2022. The research utilizes ESG ratings published by S&P as a measure of sustainability performance and tests the relationship between sustainability performance and financial performance using panel regression analysis. In the tested regression model, the financial performance of the firms is measured by the return on assets (ROA) ratio. Control variables such as firm size, sales growth, research and development expenses, and financial leverage are included in the model. The panel regression analysis employs Driscoll-Kraay standard errors, which are robust to cross-sectional dependence, autocorrelation, and heteroscedasticity issues. Both the fixed effects estimator and the random effects estimator are presented in the results. The findings indicate that the relationship between ESG and ROA is positive and statistically significant according to both estimators.