Holistic Performance Assessment: Research on the Relationship between Sustainability Reporting and Financial Performance of MBI10 Companies in R. N. Macedonia

Abstract

The complex interaction between sustainability indicators and financial
performance shapes a company's resilience and long-term value creation,
guiding the path toward a sustainable future in the global business
world. This paper attempts to explore the relationship between sustainability
reporting, measured through the ESG index (ESGIn), and the financial
performance (FP) of high-ranked companies listed on the Macedonian
Stock Exchange and part of the MBI10 Index. Through the analysis of
ten high-ranked companies, including five banks and five companies
from the real business sector, over a period of 11 years (2013-2023), the
research reveals intriguing insights into the complex relationship between
sustainability efforts and financial success. When analyzing the entire
sample, no significant correlation between ESGIn and FP was generally
observed, except for a moderately positive correlation between ESGIn
and the ROE indicator. Additional sector-specific analyses reveal different
patterns in the sectors. In the case of companies from the real business
sector, there is a moderate positive correlation between ESGIn and the
ROA and ROE indicators, while in the financial sector (banks) there is
a weak positive correlation between ESGIn and the ROA and ROE
indicators and a weak negative correlation between ESGIn and YPS.
The analysis did not reveal a correlation between ESGIn and EPS. These
results have implications for strategic decision-making in the Macedonian
market and beyond, highlighting the need for tailored approaches to
effectively integrate sustainability practices. The study contributes to the
ongoing dialogue on the relationship between sustainability indicators
and FP, providing a basis for further research and practical applications.