The Impact of Sustainable Investing on Financial Performance

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Overview
The idea of sustainable investment has become increasingly important in today's quickly changing business environment.The significance of incorporating environmental, social, and governance (ESG) considerations into investment choices is becoming acknowledged by businesses, investors, and society broadly.The relationship between sustainable investment and financial success is currently a hot topic of discussion.
Sustainable investment refers to the practice of considering ESG criteria alongside traditional financial metrics when evaluating investment opportunities.It involves directing capital towards companies that demonstrate responsible and sustainable business practices, taking into account their environmental impact, social responsibility, and governance structures.This approach recognizes that sustainable and socially responsible practices can have tangible implications for a company's long-term success and financial performance.
The integration of ESG factors into investment decision-making is driven by various factors.Increasing awareness of climate change, resource depletion, and social inequality has heightened the need for sustainable practices across all sectors.Additionally, stakeholders, including shareholders, customers, and employees, are demanding greater transparency and accountability from companies regarding their environmental and social impact.As a result, investors are recognizing that companies prioritizing sustainability and responsible business practices may be better positioned to navigate emerging risks, seize new opportunities, and deliver sustainable financial returns.reputation, and access to new markets and opportunities.
However, the relationship between sustainable investment and financial performance is complex, and findings are not always consistent across studies.Critics argue that sustainable investment strategies may impose additional costs or that short-term financial performance may not always reflect the long-term benefits of sustainability initiatives.
In the context of this study, the focus is placed on evaluating the impact of sustainable investment on the financial performance of twelve companies selected from nonfinancial sectors within the S&P ESG EGX index.The S&P ESG EGX index is a benchmark that tracks the performance of companies listed on the Egyptian Exchange (EGX) that meet specific ESG criteria.This index serves as a tool to identify and assess companies in the Egyptian market that demonstrate strong ESG practices By examining the financial performance indicators of these companies and analyzing their sustainability practices, this study aims to provide insights into the potential effects of sustainable investment on financial performance within the context of the S&P ESG EGX index.Understanding these dynamics can inform investors, companies, and policymakers about the opportunities and challenges associated with integrating sustainability into investment strategies and decision-making processes.
In essence, the study explores the relationship between sustainable investment and financial performance, taking into account the unique context of the S&P ESG EGX index.By examining the financial performance of twelve companies and analyzing their sustainability practices, the research aims to shed light on the potential impacts of sustainable investment on financial outcomes.

Research Problem (Gap)
Sustainable investing affects financial performance in various while there have been numerous studies conducted on the relationship between sustainable investment and financial performance in various contexts, there is a gap in the literature regarding the specific impact within the Egyptian market.This research aims to bridge that gap by analyzing the financial performance indicators of twelve companies within the S&P ESG EGX index and examining their sustainability practices.

Research Objective
The aim of this research lies in its contribution to the understanding of the impact of sustainable investment on financial performance within the Egyptian market.By focusing on companies listed on the Egyptian Exchange (EGX) that meet specific ESG criteria, this study provides valuable insights into the unique dynamics of sustainable investment and its effects on financial outcomes in Egypt.
Understanding the relationship between sustainable investment and financial performance is crucial for investors, companies, and policymakers.It can inform investment strategies enable companies to make more informed decisions regarding sustainability practices, and guide policymakers in creating supportive frameworks for sustainable investment.This research holds significance in the broader context of sustainable development.As the world faces increasing environmental and social challenges, the integration of sustainability into investment decisions is becoming more important.The findings of this study can contribute to the global knowledge base on sustainable investment and provide guidance for stakeholders looking to align their financial goals with sustainable practices.

Null Hypothesis (H₀):
There is no significant relationship between sustainable investment and financial performance in Egyptian companies included in the S&P ESG EGX index.

Alternative Hypothesis (H₁):
There is a significant positive relationship between sustainable investment and financial performance in Egyptian companies included in the S&P ESG EGX index.Orlitzky et al. (2003) used data from 51 U.S. corporations between 1972 and 1992 to propose a positive correlation between financial performance and corporate social responsibility (CSR).A composite index that was developed from multiple sources was used to measure corporate social responsibility, or CSR.Return on equity (ROE), return on asset (ROA), and stock returns were used to gauge financial performance.Subsequently, Derwall et al. (2005) employing 365 European stock market companies from 1997 to 2002 discovered a positive association between ESG parameters and financial performance.The KLD database was used to measure ESG characteristics, and return on equity (ROE) and return on assets (ROA) were used to measure financial performance.

Literature Review
Using 85 primary research, Olsen et al. (2006) further postulated that sustainable investment and financial success had a positive association.Depending on which main research were selected, different time periods were covered by the analysis.Numerous factors, such as a company's dedication to social and environmental challenges, were taken into consideration while measuring sustainable investment.Additionally, metrics like return on equity (ROE) and return on assets (ROA) were used to measure financial performance.
Furthermore, in the context of corporate charity giving, Brammer and Millington (2008) examined the connection between corporate financial performance (CFP) and corporate social performance (CSP).The amount of corporate charity giving was calculated using a model, and companies are categorised according to the discrepancy between their actual and anticipated gift giving.Businesses with both unusually high and low CSP outperform other businesses in terms of financial success; in the near term, unusually bad social performers do best, while exceptionally good social performers perform best over extended periods of time.
Likewise, Servaes and Tamayo (2012) used the KLD Stats database to analyse data from 1991 to 2005 for all listed US corporations in order to examine the positive association between corporate social responsibility and company value.Measuring corporate social responsibility through two dimensions: stakeholder CSR (diversity and employees) and third-party CSR (environment, human rights, and community) are the four dimensions used to measure firm value.Tobins' Q, return on assets, return on sales, and return on shareholders' equity are the other four dimensions.
Moreover, Balatbat et al.'s (2012) study examines the relationship between ESG practices and firm performance in Australian companies.The research, using ESG scores from 2008 to 2010, found a weakly positive correlation between financial performance and ESG scores.The study also found a weak negative association between errors in analyst forecasts and ESG scores.The authors suggest that ESG leaders tend to have lower portfolio returns, suggesting that ESG scores may not accurately capture true sustainability practices.Subsequently, Eccles et al. (2014) used a sample of 180 European enterprises from 2002 to 2010 to assert that there is a positive relationship between sustainable development and financial performance.The Dow Jones Sustainability Index (DJSI) ratings were used to assess sustainable development, and earnings per share (EPS), return on equity (ROE), and return on asset (ROA) were used to assess financial performance.Chowdhury & Mollah (2015) found a positive relationship between corporate social responsibility (CSR) and financial performance.Regression analysis showed that a company's financial success is influenced by CSR efforts.The study included 527 companies on the Dhaka Stock Exchange and 131 firms with annual reports from 2008-2012, using Tobin's Q, ROA, and ROE analysis.
Furthermore, a positive correlation between sustainable investment and financial performance was postulated by Friede et al. (2015).This is done by utilising 2,271 businesses in Europe between 2004 and 2009.Rating agencies' ESG scores were used to gauge sustainable investment.Tobin's Q and other market-based metrics were used to gauge financial success in addition to return on asset (ROA).
Similarly, Partners' (2015) study on sustainability practices and financial performance found a strong correlation between diligent practices and economic performance.88% of studies showed robust sustainability practices improved operational performance, cash flows, investment performance, and lower capital costs.The analysis covers risk, performance, reputation, cost of capital, operational performance, and stock prices, suggesting responsibility and profitability are complementary.
According to Lin et al. (2017), corporate social responsibility (CSR) and firm value do, in fact, positively correlate.Using 2,107 US businesses between 2009 and 2014.The Corporate Social Responsibility Index (CSRI) was utilised to measure corporate social responsibility (CSR) during the study's execution in the United States.Stock returns and company worth were measured by Tobin's Q.Moreover, Rahi et al. (2020) found a positive relationship between sustainability practices and financial performance in the Nordic financial industry.They used ESG scores and the Thomson Reuters Eikon database to extract information on 258 financial companies from 2015-2019.The study measured sustainability practices using return on asset, return on invested capital, return on equity, and earnings per share.The final sample included 152 firm years of observations for 39 companies, controlling for systematic risk, unsystematic risk, and firm leverage.Phan et al. (2021) found a positive relationship between Sustainable Development Practices (SDPs) and financial performance, demonstrating increased profitability and growth.The study measured SDPs using environmental practices, workplace practices, and community practices.Firm financial performance was measured using profitability and growth indicators.Firm representatives were asked to compare their financial performance with the sector average over the past three years, using subjective measures of financial performance.
Meanwhile, Girón et al. (2021) then concentrated on the favourable correlation between firms' economic performance and sustainability reporting.The sustainable development goals (SDGs), external assurance, Tobin's q, and a sample of 366 large Asian and African companies that addressed the SDGs in their 2017 sustainability reports were used to measure sustainability reporting.The firms' economic performance was measured by total assets, number of employees (EMP), market capitalization (CAP), taxation (TAX), earnings before interest, taxes, depreciation and amortisation (EBITDA), profit margins (PM), leverage (LEV), return on equity (ROE), and return on asset (ROA).Mohamed et al. (2021) found a positive relationship between sustainability practice and financial performance of Egyptian banks.They found that sustainable development helps banks recognize risks, access new markets, and increase investments.The study used annual reports and sustainability reports to measure financial performance and sustainability practices.
Simultaneously, Budsaratragoon and Jitmaneeroji (2021) found a positive relationship between corporate sustainability and stock value in emerging markets in the Asia-Pacific region.They used the constant growth dividend discount model and grouped sustainability measures into 15 categories.Financial performance and stock value were measured using Tobin's q, return on asset, return on equity, cost of capital, and debt to equity ratio.
Moreover, Constantinescu et al. (2021) study found a significant association between environmental, social, and governance (ESG) disclosure and firm value in the energy industry.The study used data from Thomson Reuters' Top 100 Global Energy Leaders list and two linear regression models.The findings suggest that companies should incorporate non-financial information, particularly ESG factors, in their corporate reporting to attract new capital and improve their value.Koundouri et al. (2021) also noted that there is a positive correlation between EGS performance and financial performance.Using the STOXX Europe ESG Leaders 50 Index over the previous three years as a sample, they measured EGS performance using Sustainalytics, a high-quality analytical ESG rating, and financial performance using average beta, debt to equity, return on assets, return on equity, and profit margin.Rose and Winther (2021) found a positive relationship between ESG scores and non-financial reporting of financial performance in public companies in the EU from 2015 to 2019.They used average stock price, return on assets, Tobin's q, and annual EPS to measure financial performance and ESG scores to measure non-financial performance.
Additionally, Phan et al. (2021) found a positive correlation between financial performance and sustainability initiatives, supported by the managerial advantage hypothesis and fixed resource theory.They used 116 Swedish firms in 2019 and various metrics to measure financial performance.
On the other hand, Murata and Hamori (2021) found a negative correlation between ESG Disclosures and stock price crash risk, primarily in Europe, the United States, and Japan.They used regression models to examine the impact of ESG disclosures on major market indices using firm-specific weekly returns and down-to-up volatility measures.
Likewise, Wong and Zhang (2021) studied the negative relationship between stock market reactions and adverse ESG disclosure in publicly traded U.S. companies from 2007 to 2008.The study used media channels and ESG disclosure to examine investor reactions to increased Cash Reserve Ratio due to negative ESG media coverage.The research found that firm characteristics like size, stock liquidity, S&P 500 constituents, corporate reputation status, and industry classifications explain significant differences in investors' reactions to increased CRR from negative ESG media coverage.Li et al. (2022) study found a positive correlation between stock prices and ESG performance in Chinese non-financial enterprises during the COVID-19 outbreak.They used CAR, AR, and ER measures, ESG performance averages, and control variables to measure the impact of a company's ESG performance.
Furthermore, Ekström and Malmström (2022) found a positive relationship between return on investment (ROIC) performance and environmental, social, and governance (ESG) performance.They collected secondary data from 44 companies in the European and North American textile industries and examined the data using SPSS, OLS estimation, and Tobin's q.
Hamdy et al. (2022) also found a positive relationship between corporate social performance (CSP) and corporate financial performance (CFP).This study examined the profitability levels of Egyptian listed companies using the ESG composite score of the 100 most active listed companies.The sustainability score data was sourced from the Egyptian Stock Exchange based on the ESG composite score.Furthermore, Zhang and BI (2022) examined the positive correlation between Corporate Social Responsibility and Financial Performance of 30 chemical companies from 2016-2021, using metrics like salary growth, operating cost to revenue ratio, and Return On Total Assets.Kubal et al. (2023) found a positive relationship between ESG factors and stock performance in Indian publicly traded companies.Companies with strong institutional strength achieved better results in ESG aspects and stock performance, highlighting the importance of social activities in investing in stocks.Focusing on long-term ESG performance helps companies manage risks and regulatory changes.Abdelmalak (2023) study found a positive relationship between ESG factors and company performance, particularly in developing countries.The study analysed 600 companies in 24 markets from 2014-2018, using ROS, ROA, and ROE metrics.The findings suggest that ESG factors significantly improve financial performance and attract investors.
In addition, Fu and Li (2023) found a positive relationship between ESG and financial performance in top-listed Chinese companies.They found that transparent ESG information helps avoid information asymmetry, reduces financing costs, strengthens stakeholder relationships, and enhances reputation and social image.The study used various control variables and return on assets to measure financial performance.Whelan et al. (2023) analysed over 1,000 studies from 2015 to 2020, using risk-adjusted characteristics and operating metrics like return on equity and return on asset to measure financial performance.
Moreover, Marzuki et al. (2023) studied the link between ESG, SRI, ethical, and impact investing activities and portfolio and financial performance.They analysed 260 articles from 2013 to 2022, identifying four themes: niche, motor, emerging/decreasing, and basic/transversal.Socially responsible investing, engagement, and ESG were positioned between niche and highly developed themes.The study highlights the importance of these themes for promoting sustainability and sustainable development in an efficient capital market.

Analysis and Interpretation of Results
This chapter presents the analysis and interpretation of the results obtained in the study, focusing on the impact of sustainable investing on financial performance from 2018 to 2022.The researchers examined annual data to understand the relationship between these variables.

Dependent variable
In this project, the dependent variable is "financial performance," which serves as the outcome or response variable.Financial performance is a measure of how well a company performs financially and is typically evaluated using various financial indicators such as return on assets (ROA), return on equity (ROE), Return on Sales (ROS) etc.

Independent variables
The independent variable is "sustainable investing," which is the variable of interest that is believed to have an impact on financial performance.Sustainable investing refers to the practice of considering environmental, social, and governance (ESG) criteria alongside traditional financial metrics when making investment decisions.It involves directing capital towards companies that demonstrate responsible and sustainable business practices, taking into account their environmental impact, social responsibility, and governance structures.

Research Hypothesis
The research hypothesis in this study is as follows:

Null Hypothesis (H₀):
There is no significant relationship between sustainable investing and financial performance.

Alternative Hypothesis (H₁):
There is a significant positive relationship between sustainable investing and financial performance.

Analysis and Interpretation of Results
The data were analysed using some statistical techniques and tests to measure the impact of sustainable investment on financial performance.The study sample consisted of 12 companies (After excluding; Asek Company for Mining -Ascom) during the period from 2018 to 2022.Table 1 gives a description of all the variables used in the statistical analyses as follows: So, the statistical analysis will investigate the following hypothesis which is "There is no significant relationship between sustainable investment and financial performance in Egyptian companies included in the S&P ESG EGX index" through the following sub hypotheses: 1) There is no significant relationship between sustainable investment and ROA in Egyptian companies included in the S&P ESG EGX index.
2) There is no significant relationship between sustainable investment and ROE in Egyptian companies included in the S&P ESG EGX index.
3) There is no significant relationship between sustainable investment and ROS in Egyptian companies included in the S&P ESG EGX index.
4) There is no significant relationship between sustainable investment and EPS in Egyptian companies included in the S&P ESG EGX index.
5) There is no significant relationship between sustainable investment and TOBIN Q in Egyptian companies included in the S&P ESG EGX index.
6) There is no significant relationship between sustainable investment and debt ratio in Egyptian companies included in the S&P ESG EGX index.
7) There is no significant relationship between sustainable investment and AG in Egyptian companies included in the S&P ESG EGX index.
8) There is no significant relationship between sustainable investment and GM in Egyptian companies included in the S&P ESG EGX index.9) There is no significant relationship between sustainable investment and Assets turnover in Egyptian companies included in the S&P ESG EGX index.
10) There is no significant relationship between sustainable investment and cash ratio in Egyptian companies included in the S&P ESG EGX index.
11) There is no significant relationship between sustainable investment and current ratio in Egyptian companies included in the S&P ESG EGX index.
12) There is no significant relationship between sustainable investment and operating cash flow in Egyptian companies included in the S&P ESG EGX index.
To investigate the validity of this hypothesis, a set of statistical methods and tests will be applied as follows: 1) Conducting descriptive statistics, which includes calculating minimum value, maximum value, mean and standard deviation.
2) Using the Pearson correlation coefficient to calculate the correlation coefficients between the variables, one may determine whether or not there is a relationship between them.It should be noted that the correlation coefficient's value varies from -1 to +1 and is represented by the symbol r.The intensity of the association between the variables is indicated whenever the correlation coefficient value is near to one, regardless of the sign.There is a weak association between the variables whenever the correlation coefficient value is near to zero.Conversely, the correlation coefficient's sign indicates if the relationship is direct or indirect.
If the symbol is minus (-), If the sign is positive (+), it suggests that the two variables have a direct relationship, whereby an increase in one causes a decrease in the other.If the sign is negative (-), it suggests that the relationship between the two variables is indirect.Applying multiple linear regression analysis to study the effect of the independent variables on the dependent variable.

Descriptive Statistics
Descriptive statistics were conducted using minimum value, maximum value, mean and standard deviation as shown in Table 2.

Correlation Matrix
Table 3 shows a Correlation coefficient matrix between variables using Pearson's correlation coefficient.Table 3 shows that: 1) There is a statistically significant relationship between ROA and ES, SGR, DE only at 5% significant level, whereas the value of the correlation coefficient between is 0.356, 0.511 and -0.470 respectively and the p-value = 0.005, 0.000, 0.000 < α = 0.05.
2) There is a statistically significant relationship between ROE and ES, SGR, RG only at 5% significant level, whereas the value of the correlation coefficient between is 0.337, 0.798 and 0.285 respectively and the p-value = 0.008, 0.000, 0.027 < α = 0.05.
3) There is a statistically significant relationship between ROS and ES, SGR, DE only at 5% significant level, whereas the value of the correlation coefficient between is 0.339, 0.487 and -0.486 respectively and the p-value = 0.008, 0.000, 0.000 < α = 0.05.
4) There is a statistically significant relationship between CUR and DE only at 5% significant level, whereas the value of the correlation coefficient between is -0.413 respectively and the p-value = 0.001 < α = 0.05.
5) There is a statistically significant relationship between CR and DE only at 5% significant level, whereas the value of the correlation coefficient between is -0.351 respectively and the p-value = 0.006 < α = 0.05.
6) There is a statistically significant relationship between OCFR and DE only at 5% significant level, whereas the value of the correlation coefficient between is -0.520 respectively and the p-value = 0.000 < α = 0.05.
7) There is a statistically significant relationship between ATR and DE only at 5% significant level, whereas the value of the correlation coefficient between is 0.523 respectively and the p-value = 0.000 < α = 0.05.
8) There is a statistically significant relationship between GMR and DE only at 5% significant level, whereas the value of the correlation coefficient between is -0.577 respectively and the p-value = 0.000 < α = 0.05.9) There is a statistically significant relationship between ESR and ES, G CESG, SGR, WESG only at 5% significant level, whereas the value of the correlation coefficient between are 0.265, -0.368, -0.382, 0.542 and -0.379 respectively and the p-value = 0.040, 0.004, 0.003, 0.000, 0.003 < α = 0.05.
11) There is a statistically significant very strong relationship between 2 independent variables; G and CESG at 5% significant level (Corr.=0.954, p-value = 0.000), and There is a statistically significant very strong relationship between 2 independent variables; G and CESG at 5% significant level (Corr.= 1.000, p-value = 0.000) therefore, we excluded G and WESG because they suffer from Collinearity.

Testing of the 1 st Sub Hypothesis
Using the variables indicated in equation ( 1), a statistical model was constructed in this part to assess the study's first sub hypothesis, which states, "There is no significant relationship between sustainable investment and ROA in Egyptian companies included in the S&P ESG EGX index" Where: The regression model's findings are displayed in Table 4 along with the regression coefficients, standard error (S.E.), t-test for determining the significance of each independent variable, variance inflation factor (VIF), coefficient of determination (R2), and F-test.Table 4 shows that: 1) There is a positive statistically significant effect of ES on ROA, whereas the regression coefficient is 0.495 and the p-value of the t-test for ES is smaller than the significance level at 5% (p-value = 0.010 < α = 0.05).
2) There is a positive statistically significant effect of SGR on ROA, whereas the regression coefficient is 0.411 and the p-value of the t-test for SGR is smaller than the significance level at 5% (p-value = 0.000 < α = 0.05).
3) There is a negative statistically significant effect of DE on ROA, whereas the regression coefficient is -0.023 and the p-value of the t-test for DE is smaller than the significance level at 5% (p-value = 0.000 < α = 0.05).
4) There is no statistically significant effect of CESG, RG on ROA, whereas the p-value of t-test for these variables are greater than significance level at 5% (p-value = 0.118, 0.927 > α = 0.05).
5) Moreover, the regression model is statistically significant model, whereas the p-value of F-test is smaller than the significance level at 5% (p-value = 0.000 < α = 0.05).
6) Furthermore, the model's independent variables account for 55.3% of variations in ROA, with the remaining portion being explained by random error or other variables that could have an impact on ROA but were excluded from this analysis.7) Finally, there is no multicollinearity, whereas the VIF for each independent variable is less than 10, ranges from 1.017 to 1.395.
There is a significant relationship between sustainable investment (ES and SGR only) and ROA in Egyptian companies included in the S&P ESG EGX index, therefore we reject the 1 st sub null hypothesis.

Testing of the 2 nd Sub Hypothesis
Through this section, a statistical model was built to test the 2 nd sub hypothesis of the study, which is "There is no significant relationship between sustainable investment and ROE in Egyptian companies included in the S&P ESG EGX index", using the variables as shown in equation ( 2): Where: Table 5 shows that: 1) There is a positive statistically significant effect of ES on ROE, whereas the regression coefficient is 0.522 and the p-value of the t-test for ES is smaller than the significance level at 5% (p-value = 0.023 < α = 0.05).
2) There is a positive statistically significant effect of CESG on ROE, whereas the regression coefficient is 0.566 and the p-value of the t-test for DE is smaller than the significance level at 5% (p-value = 0.048 < α = 0.05).
3) There is a positive statistically significant effect of SGR on ROE, whereas the regression coefficient is 0.992 and the p-value of the t-test for SGR is smaller than the significance level at 5% (p-value = 0.000 < α = 0.05).
4) There is no statistically significant effect of RG, DE on ROE, whereas the p-value of t-test for these variables are greater than significance level at 5% (p-value = 0.506, 0.143 > α = 0.05).
5) Additionally, it can be shown that the regression model exhibits statistical significance, whereas the F-test p-value is less than the significance level at 5% (p-value = 0.000 < α = 0.05).
6) Furthermore, the model's independent variables account for 70% of changes in ROE, with the remaining proportion coming from random error or other variables not included in the analysis.
7) Finally, there is no multicollinearity, whereas the VIF for each independent variable is less than 10, ranges from 1.017 to 1.395.
There is a significant relationship between sustainable investment (ES, CESG and SGR) and ROE in Egyptian companies included in the S&P ESG EGX index, therefore we reject the 2 nd sub null hypothesis.

Testing of the 3 rd Sub Hypothesis
Using the variables indicated in equation ( 3), a statistical model was constructed in this part to evaluate the third sub hypothesis of the study, which states, "There is no significant relationship between sustainable investment and ROS in Egyptian companies included in the S&P ESG EGX index" Where: Table 6 shows that: 1) There is a positive statistically significant effect of ES on ROS, whereas the regression coefficient is 0.489 and the p-value of the t-test for ES is smaller than the significance level at 5% (p-value = 0.040 < α = 0.05).
2) There is a positive statistically significant effect of SGR on ROS, whereas the regression coefficient is 0.443 and the p-value of the t-test for SGR is smaller than the significance level at 5% (p-value = 0.000 < α = 0.05).
3) There is a negative statistically significant effect of DE on ROS, whereas the regression coefficient is -0.029 and the p-value of the t-test for DE is smaller than the significance level at 5% (p-value = 0.000 < α = 0.05).
4) There is no statistically significant effect of CESG, RG on ROS, whereas the p-value of t-test for these variables are greater than significance level at 5% (p-value = 0.424, 0.760 > α = 0.05).
5) Additionally, it can be shown that the regression model exhibits statistical significance, whereas the F-test p-value is less than the significance level at 5% (p-value = 0.000 < α = 0.05).
6) Furthermore, the model's independent variables account for 52.3% of variations in ROS, with the remaining percentage coming from random error or other variables not included in the analysis.
7) Lastly, there is no multicollinearity, and the VIFs of each independent variable fall between 1.017 and 1.395, with a value smaller than 10.
There is a significant relationship between sustainable investment (ES and SGR only) and ROS in Egyptian companies included in the S&P ESG EGX index, therefore we reject the 3 rd sub null hypothesis.

Testing of the 4 th Sub Hypothesis
Through this section, a statistical model was built to test the 4 th sub hypothesis of the study, which is "There is no significant relationship between sustainable investment and Current ratio in Egyptian companies included in the S&P ESG EGX index", using the variables as shown in equation ( 4): Where: CUR it → Current ratio for company i during time t.The regression model's findings are displayed in Table 7 along with the regression coefficients, standard error (S.E.), t-test for determining the significance of each independent variable, variance inflation factor (VIF), coefficient of determination (R2), and F-test.Table 7 shows that:

ES
1) There is a negative statistically significant effect of DE on CUR, whereas the regression coefficient is -0.212 and the p-value of the t-test for DE is smaller than the significance level at 5% (p-value = 0.002 < α = 0.05).
3) Moreover, the regression model is statistically significant model, whereas the p-value of F-test is smaller than the significance level at 5% (p-value = 0.021 < α = 0.05).
4) In addition, the model's independent variables account for 21.3% of CUR changes, with the remaining portion being explained by random error or other variables not included in this analysis but that may have an impact on CUR. 5) Lastly, there is no multicollinearity, and the VIFs of each independent variable fall between 1.017 and 1.395, with a value less than 10.
There is no significant relationship between sustainable investment and Current ratio in Egyptian companies included in the S&P ESG EGX index, therefore we accept the 4 th sub null hypothesis.

Testing of the 5 th Sub Hypothesis
Through this section, a statistical model was built to test the 5 th sub hypothesis of the study, which is "There is no significant relationship between sustainable investment and Cash ratio in Egyptian companies included in the S&P ESG EGX index", using the variables as shown in equation ( 5): Where: CR it → Cash ratio for company i during time t.Table 8 shows that:

ES
1) There is a negative statistically significant effect of DE on CR, whereas the regression coefficient is -0.079 and the p-value of the t-test for DE is smaller than the significance level at 5% (p-value = 0.008 < α = 0.05).
2) There is no statistically significant effect of ES, CESG, SGR, RG on CR, whereas the p-value of t-test for these variables are greater than significance level at 5% (p-value = 0.513, 0.693, 0.970, 0.746 > α = 0.05).
3) Moreover, the regression model no statistically significant model, whereas the p-value of F-test is greater than the significance level at 5% (p-value = 0.141 > α = 0.05).
4) Furthermore, the model's independent variables account for 13.9% of variations in CR, with the remaining portion being explained by random error or other variables that could have an impact on CR but were excluded from the research.5) Lastly, there is no multicollinearity, and the VIFs of each independent variable fall between 1.017 and 1.395, with a value less than 10.
There is no significant relationship between sustainable investment and Cash ratio in Egyptian companies included in the S&P ESG EGX index, therefore we accept the 5 th sub null hypothesis.

Testing of the 6 th Sub Hypothesis
Using the variables indicated in equation ( 6), a statistical model was constructed through this section to test the sixth sub hypothesis of the study, which states, "There is no significant relationship between sustainable investment and Operating cash flow ratio in Egyptian companies included in the S&P ESG EGX index" Where: OCFR it → Operating cash flow ratio for company i during time t. it → The random error of the regression model.

ES
Table 9 shows the results the regression model including regression coefficients, standard error (S.E.), t-test to figure out the significance of each independent variable, Variance inflation factor (VIF), coefficient of determination (R 2 ), F-test.Table 9 shows that: 1) There is a positive statistically significant effect of ES on OCFR, whereas the regression coefficient is 1.820 and the p-value of the t-test for ES is smaller than the significance level at 10% (p-value = 0.076 < α = 0.10).
2) There is a negative statistically significant effect of DE on OCFR, whereas the regression coefficient is -0.115 and the p-value of the t-test for DE is smaller than the significance level at 5% (p-value = 0.000 < α = 0.05).
3) There is no statistically significant effect of CESG, SGR, RG on OCFR, whereas the p-value of t-test for these variables are greater than significance level at 5% (p-value = 0.321, 0.985, 0.126 > α = 0.05).
4) In addition, the regression model has statistical significance, whereas the F-test p-value is less than the significance limit at 5% (p-value = 0.000 < α = 0.05).

5)
In addition, the model's independent variables account for 35.1% of changes in OCFR, with remaining percentage coming from random error or other variables not included in the analysis that may have an impact on OCFR.
6) Lastly, there is no multicollinearity, and the VIFs of each independent variable fall between 1.017 and 1.395, with a value smaller than 10.
There is a significant relationship between sustainable investment (ES only) and Operating cash flow ratio in Egyptian companies included in the S&P ESG EGX index, therefore we reject the 6 th sub null hypothesis.

Testing of the 7 th Sub Hypothesis
In order to evaluate the seventh sub hypothesis of the study, "There is no significant relationship between sustainable investment and Debt ratio in Egyptian companies included in the S&P ESG EGX index," a statistical model was constructed through this section utilising the variables indicated in equation ( 7): Where:  it → The random error of the regression model.
Table 10 shows the results the regression model including regression coefficients, standard error (S.E.), t-test to figure out the significance of each independent variable, Variance inflation factor (VIF), coefficient of determination (R 2 ), F-test.Table 10 shows that: 1) There is no statistically significant effect of ES, CESG, SGR, RG, DE on DR, whereas the p-value of t-test for these variables are greater than significance level at 5% (p-value = 0.424, 0.760 > α = 0.05).
2) Additionally, the F-test p-value (p-value = 0.719 > α = 0.05) is less than the significance limit at 5%, indicating that the regression model is not statistically significant.
3) Moreover, the model's independent variables can account for 5.1% of variations in DR, with the remaining portion coming from random error or other variables that could have an impact on DR but were excluded from this research.4) Finally, there is no multicollinearity, whereas the VIF for each independent variable is less than 10, ranges from 1.017 to 1.395.
There is no significant relationship between sustainable investment (and Debt ratio in Egyptian companies included in the S&P ESG EGX index, therefore we accept the 7 th sub null hypothesis.

Testing of the 8 th Sub Hypothesis
Using the variables indicated in equation ( 8), a statistical model was constructed through this section to test the study's eighth sub hypothesis, which states, "There is no significant relationship between sustainable investment and Asset turnover ratio in Egyptian companies included in the S&P ESG EGX index." Where: ATR it → Asset turnover ratio for company i during time t.Table 11 shows that:

ES
1) There is a positive statistically significant effect of DE on ATR, whereas the regression coefficient is 0.143 and the p-value of the t-test for DE is smaller than the significance level at 5% (p-value = 0.000 < α = 0.05).
3) Moreover, the regression model is statistically significant model, whereas the p-value of F-test is smaller than the significance level at 5% (p-value = 0.001 < α = 0.05).
4) In addition, the independent variables forming the model can explain 30.7% of changes in ATR, and the remaining percentage due to the random error or other factors that can affect ATR and did not include into this analysis.5) Finally, there is no multi collinearity, whereas the VIF for each independent variable is less than 10, ranges from 1.017 to 1.395.
There is no significant relationship between sustainable investment and Asset turnover ratio in Egyptian companies included in the S&P ESG EGX index, therefore we accept the 8 th sub null hypothesis.

Testing of the 9 th Sub Hypothesis
Using the variables listed in equation ( 9), a statistical model was constructed in this section to test the study's ninth sub hypothesis, which states, "There is no significant relationship between sustainable investment and Gross margin ratio in Egyptian companies included in the S&P ESG EGX index." Where: GMR it → Gross margin ratio for company i during time t. it → The random error of the regression model.

ES
Table 12 shows the results the regression model including regression coefficients, standard error (S.E.), t-test to figure out the significance of each independent variable, Variance inflation factor (VIF), coefficient of determination (R 2 ), F-test.Table 12 shows that: 1) There is a positive statistically significant effect of RG on GMR, whereas the regression coefficient is 0.128 and the p-value of the t-test for SGR is smaller than the significance level at 10% (p-value = 0.062 < α = 0.10).
2) There is a negative statistically significant effect of DE on GMR, whereas the regression coefficient is -0.039 and the p-value of the t-test for DE is smaller than the significance level at 5% (p-value = 0.000 < α = 0.05).
3) There is no statistically significant effect of ES, CESG, SGR on GMR, whereas the p-value of t-test for these variables are greater than significance level at 5% (p-value = 0.402, 0.913, 0.307 > α = 0.05).
4) Further, the regression model has statistical significance, whereas the F-test p-value is less than the significance limit at 5% (p-value = 0.000 < α = 0.05).
5) In the meantime, the model's independent variables account for 44.3% of variations in GMR, with the remaining portion being explained by random error or other variables that could have an impact on GMR but were excluded from this research.6) Finally, there is no multicollinearity, whereas the VIF for each independent variable is less than 10, ranges from 1.017 to 1.395.
There is no significant relationship between sustainable investment and Gross margin ratio in Egyptian companies included in the S&P ESG EGX index, therefore we accept the 9 th sub null hypothesis.

Testing of the 10 th Sub Hypothesis
Using the variables listed in equation, a statistical model was constructed in this section to test the study's 10th sub hypothesis, which states, "There is no significant relationship between sustainable investment and Earnings per share ratio in Egyptian companies included in the S&P ESG EGX index."(10): Where: ESR it → Earnings per share ratio for company i during time t. it → The random error of the regression model.

ES
Table 13 shows the results the regression model including regression coefficients, standard error (S.E.), t-test to figure out the significance of each independent variable, Variance inflation factor (VIF), coefficient of determination (R 2 ), F-test.Table 13 shows that: 1) There is a negative statistically significant effect of CESG on ESR, whereas the regression coefficient is -11.951 and the p-value of the t-test for ES is smaller than the significance level at 5% (p-value = 0.010 < α = 0.05).
2) There is a positive statistically significant effect of SGR on ESR, whereas the regression coefficient is 7.851 and the p-value of the t-test for ES is smaller than the significance level at 5% (p-value = 0.000 < α = 0.05).
3) There is a negative statistically significant effect of RG on ESR, whereas the regression coefficient is -1.566 and the p-value of the t-test for SGR is smaller than the significance level at 10% (p-value = 0.078 < α = 0.10).
4) There is a negative statistically significant effect of DE on ESR, whereas the regression coefficient is -0.246 and the p-value of the t-test for DE is smaller than the significance level at 5% (p-value = 0.007 < α = 0.05).
5) The results indicate that there is no significant impact of ES on ESR, however the t-test's p-value is higher than the significance limit at 5% (p-value = 0.973 > α = 0.05).
6) In addition, the regression model exhibits statistical significance, whereas the F-test p-value is less than the significance limit at 5% (p-value = 0.000 < α = 0.05).
7) Furthermore, the model's independent variables account for 46.1% of variations in ESR, with the remaining portion being explained by random error or other variables not included in the analysis.Finally, there is no multicollinearity, whereas the VIF for each independent variable is less than 10, ranges from 1.017 to 1.395.
There is a significant relationship between sustainable investment (CESG and SGR only) and Earnings per share ratio in Egyptian companies included in the S&P ESG EGX index, therefore we reject the 10 th sub null hypothesis.

Testing of the 11 th Sub Hypothesis
Through this section, a statistical model was built to test the 11 th sub hypothesis of the study, which is "There is no significant relationship between sustainable investment and Tobin Q in Egyptian companies included in the S&P ESG EGX index", using the variables as shown in equation ( 11  Table 14 shows that: 1) There is no statistically significant effect of ES, CESG, SGR, RG, DE on TQ, whereas the p-value of t-test for these variables are greater than significance level at 5% (p-value = 0.837, 0.239, 0.553, 0.873, 0.409 > α = 0.05).
2) Moreover, the regression model is not statistically significant model, whereas the p-value of F-test is smaller than the significance level at 5% (p-value = 0.801 > α = 0.05).
3) In addition, the independent variables forming the model can explain 4.1% of changes in TQ, and the remaining percentage due to the random error or other factors that can affect TQ and did not include into this analysis.4) Finally, there is no multicollinearity, whereas the VIF for each independent variable is less than 10, ranges from 1.017 to 1.395.
There is no significant relationship between sustainable investment and Tobin Q in Egyptian companies included in the S&P ESG EGX index, therefore we accept the 11 th sub null hypothesis.

Testing of the 12 th Sub Hypothesis
Utilising the variables indicated in equation ( 12), a statistical model was constructed through this section to assess the study's 12th sub hypothesis, which states, "There is no significant relationship between sustainable investment and Assets Growth in Egyptian companies included in the S&P ESG EGX index":  Table 15 shows that: 1) There is a positive statistically significant effect of RG on AG, whereas the regression coefficient is 0.674 and the p-value of the t-test for ES is smaller than the significance level at 5% (p-value = 0.000 < α = 0.05).
2) There is no statistically significant effect of ES, CESG, SGR, DE on AG, whereas the p-value of t-test for these variables are greater than significance level at 5% (p-value = 0.934, 0.502, 0.496, 0.324 > α = 0.05).
3) Moreover, the regression model exhibits statistical significance, while the F-test's p-value is less than the significance level at 5% (p-value = 0.000 < α = 0.05).
4) In addition, the model's independent variables account for 61.2% of changes in AG, with the remaining portion being explained by random error or other variables not included in the analysis.
5) Finally, there is no multicollinearity, whereas the VIF for each independent variable is less than 10, ranges from 1.017 to 1.395.
There is no significant relationship between sustainable investment and Assets Growth in Egyptian companies included in the S&P ESG EGX index; therefore, we accept the 12 th sub null hypothesis.

Conclusion
This study investigates the effect that sustainable investing has on financial performance.The integration of environmental, social, and governance (ESG) criteria in investment decisions has gained recognition due to increased awareness of climate change, resource depletion, social inequality, and demands for transparency and accountability from stakeholders.Companies that prioritize sustainability and responsible business practices are found to achieve better financial performance over the long term.These companies benefit from reduced operational costs, improved risk management, enhanced brand reputation, and access to new markets and opportunities.The choice of Egypt as the research object is justified by the need to examine sustainable investment practices and their implications within a specific country context.Egypt, as a developing country with its unique economic, social, and environmental challenges, provides an interesting case study to explore the relationship between sustainable investment and financial performance Based on the data and analysis using the regression model and correlation results presented in this project, as well as the information from the literature review, it can be concluded that there is a significant relationship between sustainable investment and financial performance.
The results of our analysis indicate a positive correlation between corporate social responsibilities (CSR) or ESG factors and financial performance measures such as return on assets (ROA), return on equity (ROE), and return on sales (ROS) as well the study results that there is no significant relation between ESG factors and some indicators like Current ratio, Cash ratio, Operating cash flow, Debt ratio, turnover ratio, Gross margin ratio, Tobin Q and assets growth.
The investigation conducted in this project focused on evaluating the impact of sustainable investment on the financial performance of twelve companies (

Recommendation
Based on the findings of this project and the literature review, the following recommendations are suggested: 1) Investors should consider integrating ESG factors into their investment decisions.By incorporating sustainability considerations alongside traditional financial metrics, investors can potentially achieve enhanced financial performance over the long term.
2) Companies should prioritize sustainable and responsible business practices.By demonstrating commitment to ESG criteria, companies can improve their financial performance, reduce operational costs, manage risks effectively, enhance their brand reputation, and gain access to new markets and opportunities.
3) Policymakers should promote and incentivize sustainable investment practices.Creating a supportive regulatory framework and providing incentives for companies to adopt sustainable practices can encourage the integration of ESG factors in investment strategies, leading to positive economic and environmental outcomes.
4) Further research should be conducted to explore the specific mechanisms and pathways through which sustainable investment influences financial performance.This can help deepen our understanding of the relationship and provide more insights for investors, companies, and policymakers.
5) Long-term performance evaluation should be emphasized.Sustainable investment strategies may not always yield immediate financial benefits, but they have the potential to deliver sustainable and resilient financial performance over time.Therefore, investors should adopt a long-term perspective when evaluating the impact of sustainable investment on financial outcomes.

Table 1 .
Description of the variables

Table 3 .
Correlation matrix between variables for company i during time t.
→ Total Dept to Equity for company i during time t.→The constant of the regression model.j→ Regression coefficients for independent variables.it → The random error of the regression model.

Table 4 .
Regression model between sustainable investment and ROA

Table 5 .
for company i during time t.Regression model between sustainable investment and ROE → Total Debt to Equity for company i during time t.→The constant of the regression model.j→Regressioncoefficientsfor independent variables.it→Therandom error of the regression model.The regression model's findings are displayed in Table5, together with the regression coefficients, standard error (S.E.), t-test for determining the significance of each independent variable, variance inflation factor (VIF), coefficient of determination (R2), and F-test.

Table 6 .
for company i during time t.Regression model between sustainable investment and ROS it → Sustainable Growth Rate for company i during time t.RG it→ Revenue Growth for company i during time t.DE it→ Total Dept to Equity for company i during time t.→The constant of the regression model.j→Regressioncoefficients for independent variables.The results of the regression model are displayed in Table (6), together with the regression coefficients, standard error (S.E.), t-test for determining the significance of each independent variable, variance inflation factor (VIF), coefficient of determination (R2), and F-test.

Table 7 .
Regression model between sustainable investment and CUR it

Table 8 .
Regression model between sustainable investment and CR it → ES Practices Commitment Ratio for company i during time t. it → Total Dept to Equity for company i during time t.→The constant of the regression model.j→Regressioncoefficientsforindependentvariables.it→Therandom error of the regression model.Table8shows the results the regression model including regression coefficients, standard error (S.E.), t-test to figure out the significance of each independent variable, Variance inflation factor (VIF), coefficient of determination (R 2 ), F-test.
it → ES Practices Commitment Ratio for company i during time t.

Table 9 .
Regression model between sustainable investment and OCFR

2 = 0.351 F value = 5.853 p-value = 0.000
ratio for company i during time t.

Table 10 .
Regression model between sustainable investment and DR

2 = 0.051 F value = 0.575 p-value = 0.719
it → ES Practices Commitment Ratio for company i during time t.

Table 11
displays the regression model's findings, including the regression coefficients, standard error (S.E.), t-test for determining the significance of each independent variable, coefficient of determination (R2), variance inflation factor (VIF), and F-test.

Table 11 .
Regression model between sustainable investment and ATR it → ES Practices Commitment Ratio for company i during time t.

Table 12 .
Regression model between sustainable investment and GMR it → ES Practices Commitment Ratio for company i during time t.

Table 14
shows the results the regression model including regression coefficients, standard error (S.E.), t-test to figure out the significance of each independent variable, Variance inflation factor (VIF), coefficient of determination (R 2 ), F-test.

Table 15
shows the results the regression model including regression coefficients, standard error (S.E.), t-test to figure out the significance of each independent variable, Variance inflation factor (VIF), coefficient of determination (R 2 ), F-test.

Table 15 .
Regression model between sustainable investment and AG Abou Kir Fertilizers-Cleopatra Hospital Company-Dice Sport & Casual Wear-Edita Food Industries S.A.E-ELSWEDY ELECTRIC-Ibnsina Pharma-Juhayna Food Industries -GB Auto -Raya Contact Center-Sidi Kerir Petrochemicals -Telecom-Oriental weavers) selected from nonfinancial sectors within the S&P ESG EGX index.The S&P ESG EGX index serves as a benchmark for companies listed on the Egyptian Exchange (EGX) that demonstrate strong ESG practices.By examining the financial performance indicators of these companies and analyzing their sustainability practices, valuable insights were gained into the potential effects of sustainable investment on financial performance.The research results have practical significance for various stakeholders.Investors can benefit from the findings by gaining a better understanding of the potential effects of sustainable investment on financial performance, thereby making more informed investment decisions.Companies operating in the Egyptian market can use the insights to strategize and implement sustainable practices, which may lead to improved financial performance.Policymakers can utilize the research results to design policies and regulations that promote sustainable investment, fostering economic growth and sustainable development in Egypt.