Environmental, Social, and Governance (ESG) Performance and Corporate Resilience: An Analysis of Saudi Listed Companies

Abstract

This research investigates the impact of environmental, social, and governance (ESG) performance on the resilience of non-financial listed firms in Saudi Arabia. The analysis is based on a sample of 128 firms from 2014 to 2023 and employs a fixed-effects regression approach. The results indicate that ESG performance is positively and significantly associated with corporate resilience, as predicted by stakeholder and legitimacy frameworks. Thus, the findings suggest that a commitment to ESG can strengthen a firm’s competitive advantage and enhance revenue generation for long-term sustainability, thereby contributing to corporate resilience. This result remains consistent across alternative measures of corporate resilience and after controlling for potential endogeneity. The evidence has implications for policymaking, particularly in developing additional guidelines on the benefits of ESG reporting. The findings can support compliance with the Sustainable Development Goals (SDGs), which emphasise a multi-stakeholder perspective on corporate sustainability and long-term value creation. Overall, the results provide managers and policymakers with new strategies to enhance corporate stability and sustainable management amid volatile market conditions.