The study discusses ESG performance and its relationship with firm performance, where cost of capital acts as a critical mediator. The results clearly indicate that effective ESG performance has positive influence upon firm performance, and each of environmental, social, and governance components contribute uniquely. In addition, the study shows that superior ESG performance translates into reduced cost of capital, which improves overall firm performance. The outcomes of the mediation analysis highlight the importance of cost of capital to link ESG factors to corporate financial performance. The data prove there is a correlation between high ESG performance and financial success, low capital costs and therefore confirm the case for priority of ESG factors in corporate management. By providing insight into the role of ESG in forming both financial and corporate success, this research provides investors and managers pursuing both environmentally responsible and profitable operations with valuable insight.
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