Green Marketing and Environmental Cost Accounting: Evaluating Financial Performance and Sustainability Outcomes

Abstract

This study investigates the relationship between Environmental, Social, and Governance (ESG) performance and firms’ financial health within the context of sustainability and green signalling. Drawing on signalling theory and the resource-based view, the research examines whether ESG performance serves as a credible indicator of financial strength and stability. Using a secondary dataset comprising 985 firm-level observations, the study employs quantitative analysis, including descriptive statistics, correlation, and regression techniques. The findings reveal a positive and statistically significant relationship between ESG performance and financial health indicators. Specifically, ESG shows a stronger association with the Piotroski score, indicating its influence on operational efficiency and financial strength, while its relationship with the Altman Z-score is comparatively weaker, suggesting a more limited impact on overall financial stability. These results highlight that sustainability practices contribute more directly to internal performance rather than immediate solvency outcomes. The study also emphasizes the importance of aligning green marketing signals with actual ESG performance to enhance credibility and avoid greenwashing risks. Despite limitations related to secondary data and proxy-based measurement, the research provides valuable insights into the role of ESG as a strategic tool for improving financial outcomes. The findings contribute to the growing literature on sustainability and corporate performance.