THE IMPACT OF ENVIRONMENTAL, SOCIAL, AND GOVERNANCE PERFORMANCE SCORES ON THE SUSTAINABLE GROWTH OF LISTED COMPANIES ASSESSED BY THE SET ESG RATING IN THE STOCK EXCHANGE OF THAILAND

Abstract

This research aims to examine the impact of Environmental, Social, and Governance (ESG) scores on the sustainable growth of listed companies assessed by the SET ESG Rating in the Stock Exchange of Thailand, based on 517 firm-year observations. The dependent variable is sustainable growth, which is defined as the maximum growth rate a firm can achieve without relying on external financing. The independent variable is the ESG score, while control variables include firm size, leverage ratio, and industry type. Statistical methods include descriptive statistics, Pearson's correlation coefficient, and multiple regression analysis. Preliminary results from the pooled OLS model indicated that ESG scores had a statistically significant positive effect on sustainable growth. However, due to statistically significant autocorrelation, the Breusch-Pagan LM test and Hausman test were conducted to select the appropriate model. The results indicated that the Fixed Effects Model (FEM) was the most suitable model. The findings reveal that, after controlling for time-invariant, firm-specific factors using the FEM, ESG scores did not have a statistically significant effect on sustainable growth, contradicting the pooled OLS findings. Meanwhile, the leverage ratio was the only variable showing a statistically significant negative relationship with sustainable growth, consistent across both models.

Keywords: ESG Score, Sustainable Growth, Sustainable Investment, Thai Capital Market