Book Title: Global Perspectives in Multidisciplinary Research and Scholarly Innovation
Editors: Dr. Aditi Deka Pathak, and Prof. Guptajit Pathak
ISBN: 978-81-69297-30-1
Chapter: 3
DOI: https://doi.org/10.59646/714/3
Authors: Sathish P, and Dr. A. Shameem
Abstract
Automobile manufacturing companies are increasingly adopting Environmental, Social & Governance (ESG) practices due to the desire to be environmentally responsible; keep up with investor demands; comply with sustainability regulations; and satisfy customer expectations. Customers now expect automobile manufacturers to produce automobiles using environmentally responsible production processes; reduce their greenhouse gas emissions; improve their company’s corporate governance; and be socially responsible. The focus of this research will be on large automobile manufacturers producing passenger vehicles in India, specifically, in the Chennai region. The major companies included in this research are Hyundai Motor India, Renault Nissan Automotive India Private Ltd, BMW India, Ford India, Renault India, Nissan India and Mitsubishi Motors. The objective of this research study will be to assess how financial performance metrics such as return on assets (ROA), return on equity (ROE), profit margin, market capitalization, revenue growth and earnings per share (EPS) impact ESG adoption by the automobile manufacturers. According to the research results, organizations that have good ESG (Environmental, Social, Governance) practices will have financial sustainability, operational effectiveness, and confidence from their investors, as well as being competitive for the long term based on their ability to use ESG as a performance measurement tool. It also shows that there is a positive correlation between the adoptions of/based on ESG and financial performance indicators. Therefore, it is evident that companies with higher ESG scores; generate more profit; have a favorable level of market reputation relative to other companies; and are more environmentally sustainable than companies with lower ESG ratings. As such, this will lead to the ultimate conclusion that organizations will use ESG for regulatory (compliance), but also, as a tool to increase the overall performance of their organizations and will lead to long-term growth in the manufacturing of passenger vehicles.
Keywords: ESG Framework, Passenger Vehicle Manufacturing Sector, Financial Metrics, Sustainability, Chennai Automobile Companies, Corporate Governance.