ESG integration in supply chain management and firm performance: Evidence from pharmaceutical and electronics firms in India

Abstract

Environmental, social, and governance (ESG) principles provide a structured framework for enhancing corporate accountability and long term value creation, and as significant ESG risks increasingly arise within supply chains, integrating ESG into supply chain management (SCM) has become essential. This study examines the impact of ESG integration in SCM on firm performance, focusing on return on equity (ROE) and revenue growth among top pharmaceutical and electronics firms in India. Much of the existing literature remains conceptual, lacks a holistic approach to ESG, and offers limited evidence from emerging economies such as India. This study addresses these gaps through an empirical, quantitative research design based on secondary data. A sample of ten firms over five years was selected using purposive sampling, yielding fifty firm year observations. ESG scores were drawn from the Refinitiv database, while financial data were obtained from the Prowess IQ database, with ESG score treated as the independent variable and ROE and revenue growth as the dependent variables. Descriptive statistics, correlation, and regression analysis were conducted using SPSS. The results reveal moderate average ESG adoption (mean score of 63.72), a strong positive correlation between ESG and ROE (r equals 0.670, p less than 0.01), and a moderate positive correlation between ESG and revenue growth (r equals 0.341, p less than 0.05). Regression results confirm that ESG scores significantly predict firm performance, explaining 44.9 percent of the variance in ROE and 11.6 percent of the variance in revenue growth. These findings indicate that ESG integration in SCM meaningfully improves firm performance, particularly profitability, by enhancing operational efficiency, governance, and risk management. The study underscores the strategic importance of ESG driven supply chain practices for sustainable firm performance in India and offers implications for managers and policymakers seeking to promote ESG oriented supply chain strategies.