GREEN INNOVATION, ENVIRONMENTAL, SOCIAL, AND GOVERNANCE (ESG), AND CORPORATE FINANCIAL PERFORMANCE
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Universiti Malaysia Sarawak (UNIMAS)
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The purpose of this study is to investigate the relationship between Green Innovation (GI), Environmental, Social, and Governance (ESG) practices, and Corporate Financial Performance (CFP) among firms listed on the FTSE Bursa Malaysia Top 100 Index from 2018 to 2023. This research examines both the direct impact of green innovation and ESG on corporate financial performance, as well as the moderating role of ESG in the green innovation and corporate financial performance relationship. Additionally, the analysis is segmented across pre-COVID, during-COVID, and post-COVID periods to assess the temporal effects of global disruption. The main results reveal that green innovation has a positive and statistically significant effect on market-based firm performance. The ESG Score does not exhibit a significant moderating effect. While ESG Rating not consistently significant on its own, but it shows stronger relevance than ESG Score. However, when ESG Rating is introduced as a moderator, it negatively affects the relationship between green innovation and corporate financial performance, indicating that possible resource strain or misalignment in simultaneous implementation.