Influence of Environmental, Social, and Governance Practices on Financial Performance of Listed Pharmaceutical Firms in Nigeria: Moderating role of Technological Innovation

This paper aims to assess the effect of environmental, social, and governance (ESG) practices on the financial performance of listed pharmaceutical firms in Nigeria, while also investigating the moderating role of technological innovation. Employing descriptive statistics and panel regression, the firms’ financial statements, sustainability reports, and annual reports covering the years 2009–2024 serve as the basis for the research. Return on Assets (ROA) was used as a proxied for financial performance, ESG practices were evaluated through content analysis, and technological innovation was measured by investment in research and development (R&D). The analysis indicated that ESG practices significantly and positively influence ROA and the interaction between ESG practices and investment in R&D showed a significant positive contribution to financial performance. However, leverage negatively affects ROA, while firm size and age show insignificant influence.  These findings suggest that sustaining ESG initiatives, alongside robust R&D commitments, can strengthen the financial outcomes and long-term competitiveness of pharmaceutical companies, and maintain prudent debt management to reduce financial loss.