ESG PERFORMANCE AND PROFITABILITY IN VIETNAMESE AGRICULTURAL FIRMS: PANEL AND PREDICTIVE EVIDENCE

Abstract

Whether environmental, social, and governance (ESG) investment improves firm profitability remains uncertain in agriculture, where sustainability initiatives may reduce operating risks but require substantial up-front costs. This study examines the relationship between ESG performance and return on assets (ROA) using an unbalanced panel of 683 firm-year observations from 78 Vietnamese agricultural firms during 2016–2025. Firm and year fixed-effects models are employed, supplemented by lagged specifications, production-system comparisons, and a limited predictive analysis using Elastic Net and Random Forest. The results show that aggregate ESG performance is not significantly associated with profitability, while governance exhibits a positive relationship with ROA. The financial relevance of ESG also varies across production systems, with stronger effects observed among livestock firms and differences in the environmental dimension between livestock and crop production. Predictive improvements from nonlinear machine-learning models are limited. Overall, the findings suggest that ESG–profitability relationships in agriculture are primarily pillar- and production-specific rather than reflecting a uniform ESG premium.