Effect of Sustainable Business Practices on the Business Performance: A Study of Listed SMEs in India

Abstract

This study investigates the effect of sustainable business practices on the financial performance of manufacturing SMEs in India, a sector vital to the country's GDP and employment. As sustainability becomes a key driver of competitive advantage, innovation, and cost reduction, the research focuses on how practices like energy efficiency, waste minimization, ethical labor practices, and responsible supply chain management influence financial metrics such as Earnings Per Share (EPS) in publicly listed companies within the textiles and consumer goods industries. Using a quantitative approach, data was gathered from annual reports, sustainability reports, and ESG disclosures, analyzing variables like the Sustainability Index, Dynamic Workplace, and Community Engagement. The regression analysis reveals that sustainability's overall impact on EPS is minimal: Dynamic Workplace negatively correlates with EPS, suggesting that improvements in workplace dynamics may decrease EPS, while Community Engagement shows a positive correlation with EPS, indicating that increased community involvement can boost financial outcomes. The Sustainability Index, however, does not exhibit a significant relationship with EPS, implying that it may not be a major driver of financial performance for the selected companies.