Impact of ESG on Profitability and Firm Value: An Empirical Study of Indian Companies Under BRSR Framework

ABSTRACT Incorporating ESG principles is one of the most significant aspects affecting business sustainability and financial success in emerging markets. With a focus on 65 companies listed on the NSE 100 ESG Index between 2018 and 2024 a period when SEBI transitioned from the Business Responsibility Reporting framework to the more comprehensive Business Responsibility and Sustainability Reporting framework this study examines the relationship between ESG performance and financial outcomes. The study employs panel data regression to investigate the relationship between ESG ratings and two key financial performance indicators: firm value (Tobin's Q) and profitability (Return on Assets), with business size and leverage serving as control variables. According to this study, ESG performance significantly increases profitability, demonstrating how sustainable practices can lower risk and boost operational effectiveness. ESG also positively affects corporate value, albeit to a lesser extent, indicating that Indian markets are gradually incorporating sustainability into valuation calculations. Business size has a negative effect on both ROA and Tobin's Q, suggesting that larger companies have to deal with higher compliance costs and rigidities even while leverage is little. All things considered, the findings demonstrate that ESG is a strategic element that influences long-term resilience, investor trust, and competitiveness in the Indian business climate. Keywords: ESG, Financial Performance, ROA, Tobin’s Q, NSE 100 ESG Index, BRSR and India.