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

Abstract

<jats:p>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.</jats:p>