An Assessment of the Influence of ESG Performance on Financial Performance and Market Value: Evidence from the Nigerian Consumer Goods Sector

Abstract

This study examines how ESG performance scores affect the firm performance and market value of consumer goods companies listed on the Nigerian Exchange Group, focusing on both individual pillars and overall ESG scores in the short term. This study employs panel regression analysis using data from 21 consumer goods firms listed on the Nigerian Exchange Group (NGX) between 2018 and 2023. Descriptive statistics and correlation analysis were also applied to examine the relationship between ESG performance scores, firm performance (ROA), and market value. ESG dimensions affect financial outcomes differently. Diversity initiatives reduced ROA, while community engagement and social performance lowered market value. Governance had a positive but insignificant effect, and the overall ESG score showed no significant short-term impact. The study focuses on Nigerian consumer goods firms over six years. Future research could examine other industries and longer periods to capture the long-term effects of ESG integration. Firms should manage environmental and social initiatives strategically to align with investor expectations, while prioritizing governance improvements, which the market views more favorably and which enhance efficiency and transparency. The study emphasizes the need for greater awareness of the long-term societal benefits of ESG practices to bridge the gap between perceived costs and sustainable value creation in emerging economies. This study adds to limited ESG research in emerging markets, particularly Nigeria, by analyzing individual ESG pillars rather than aggregate scores and providing sector-specific insights for managers and investors.