ASSESSING THE IMPACT OF ENVIRONMENTAL DISCLOSURE INDEX (EDI) ON FINANCIAL PERFORMANCE: A STUDY OF SELECTED INDIAN PHARMACEUTICAL COMPANIES

Abstract

This study examines the association between environmental disclosure and financial performance in selected Indian pharmaceutical companies, namely Sun Pharmaceutical Industries Ltd., Dr. Reddy’s Laboratories Ltd., and Cipla Ltd., over the period from FY2020–21 to FY2023–24. The Environmental Disclosure Index (EDI) was developed using key environmental parameters from annual reports and sustainability disclosures. Financial performance was evaluated through Return on Assets (ROA), Return on Equity (ROE), and Net Profit Margin (NPM). The results of correlation and t-test analyses revealed a significant positive association between EDI scores and financial indicators for all three companies. These findings suggest that firms adopting transparent environmental practices tend to achieve better financial outcomes. The study highlights the growing importance of sustainability reporting in the Indian corporate sector and concludes that strong environmental management supports both ecological responsibility and long-term profitability.