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The Link Between Environmental and Social Costs and a Firm Value: A Study on Nifty 50 Companies

Indian Journal of Sustainable Development

Volume 12 Issue 1

Published: 2026
Author(s) Name: Ummatul Fatma, Amitava Mondal | Author(s) Affiliation: Department of Commerce, Sidho Kanho Birsha University, Purulia, West Bengal, India.
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Abstract

With the increase in international regulations for sustainability and a growing interest of the investors, the Securities and Exchange Board of India (SEBI) has mandated that Indian companies follow Business Responsibility and Sustainability Reporting (BRSR) guidelines from fiscal year (FY) 2023, which also includes capital expenditure investments in specific technologies to improve the environmental and social impacts of products and processes. This paper examines how the market value of Indian companies is affected by their Environmental and Social Costs (ENVSCs). The study uses panel data to examine the relationship between firms’ value and the ENVSC of Nifty 50 companies from 2021 to 2023. ENVSC has been calculated from the respective integrated annual reports, while the dependent variables, Tobin’s Q and earnings per share (EPS), have been taken from their accounting metrics. The empirical work suggests that ENVSC negatively affects firms’ value in the short term. The present study used a pooled ordinary least squares (OLS) model to examine the impact of the firms’ ENVSC on their market value creation, with results indicating that ENVSC adversely affects firm value. The paper has practical implications for key stakeholders and investors, who must understand environmental and social costs and how they affect the market. This study may also help policymakers develop a fixed percentage of capital expenditure in ENVSC to improve overall sustainability and disparity among companies and sectors. This study adds insightful information on environmental reporting practices and the effect of ENVSC.

Keywords: Environmental and Social Cost (ENVSC), BRSR, Environmental Reporting Practices, Nifty 50, Firms Value, Tobins Q

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