IMPACT OF ENVIRONMENTAL PERFORMANCE OF AUTOMOBILE COMPANIES ON THEIR SUSTAINABLE FINANCIAL PERFORMANCE

Abstract

Academics are currently emphasizing the sustainable financial growth of business firms through the preservation of the environment. Environmentally conscious firms would have more growth prospects in the future. These firms would be able to get more relief in taxes, financing, and technical support from the government. Therefore, to achieve long-term sustainability in financial performance, firms need to pay more attention to their environmental performance. Thus, the current study aims to investigate the effect of the environmental performance of automobile firms on their sustainable financial performance. For analysis, the data of 11 automobile firms listed on PSX were collected from their annual reports for the period from 2013 to 2022. Results of regression analysis show the environmental performance of firms has a significant and positive effect on their sustainable financial performance. It implies that firms' efforts to adopt eco-friendly technologies are paying them well and are also contributing to their sustainable financial performance. Thus, environmentally conscious firms can attract more business and save more on taxes, and penalties. However, to achieve sustainability through finance, the financial system must be rebuilt and modified to consider the unique requirements of sustainable development. The findings of the study suggest that policymakers should facilitate firms in adopting eco-friendly technologies by providing various incentives like tax rebates, easy access to subsidized finance, and technical support.