Assessing the impact of sustainability indicators on corporate governance: An empirical analysis of esg performance, value creation, reporting quality, and financial outcomes

Abstract

In an era of increasing stakeholder pressure and regulatory emphasis on sustainability, corporate governance plays a pivotal role in shaping long-term financial and non-financial performance. This study investigates the impact of four key sustainability-driven variables ESG Performance Score, Sustainable Value Added (SVA), Integrated Reporting Quality (IRQ), and Long-Term Financial Performance (ROA) on the overall Corporate Governance Score. Using a quantitative, explanatory research design, data were collected from 50 firms across sustainability-sensitive sectors, selected based on the availability of integrated reports, ESG scores, and governance disclosures. The study employed multiple linear regression analysis to test the relationships between the variables. Results reveal that all four independent variables have a significant and positive effect on corporate governance quality, with ESG performance and reporting quality emerging as particularly strong predictors. These findings support the theoretical argument that sustainability metrics and governance effectiveness are mutually reinforcing. The study contributes to both academic and managerial discourse by highlighting the strategic role of governance in embedding sustainability into financial models. Implications extend to investors, corporate boards, and policymakers seeking to strengthen governance frameworks aligned with sustainable development goals.