Assessing the relationship between Environmental, Social and Governance (ESG) initiatives and the profitability of a firm: A case of Zambian Breweries Plc, Lusaka Plant

Mwenya, Eddie and Lesa, Christine (2025) Assessing the relationship between Environmental, Social and Governance (ESG) initiatives and the profitability of a firm: A case of Zambian Breweries Plc, Lusaka Plant. World Journal of Advanced Research and Reviews, 26 (1). pp. 3742-3765. ISSN 2581-9615

The study establishes the relationship between Environmental, Social, and Governance (ESG) initiatives and the profitability of Zambian Breweries Plc, Lusaka Plant. The sample size was 160 for quantitative data and 10 for qualitative data. Using a multiple regression analysis of survey data and financial reports from 2021 to 2023, the study assesses the relationship between ESG initiatives and the firm’s profitability. The results reveal a moderate positive relationship (R = 0.406) between ESG initiatives and profitability, with ESG factors explaining 16.5% of the variation in profitability (R² = 0.165). Among the three ESG components, social initiatives exhibited the strongest relationship with profitability (β = 0.362, p < 0.05), indicating that employee training and development, responsible marketing and community engagement initiatives significantly enhance financial performance. Governance initiatives had a moderate but statistically insignificant relationship (β = 0.144, p = 0.065), suggesting the need for stronger governance structures to realize profitability gains. Conversely, environmental initiatives showed an extremely weak and insignificant relationship with profitability (β = 0.011, p = 0.883), likely due to high implementation costs and delayed financial returns. The findings align with the stakeholder theory, which emphasizes the financial benefits of prioritizing social responsibility, and partially support agency theory, which highlights the role of governance in profitability. Conversely, the weak relationship between environmental initiatives and profitability contradicts the resource-based view (RBV) theory, which posits that sustainability can be a source of competitive advantage and improved profitability. The qualitative findings highlight key implementation challenges, including lack of knowledge and expertise, resistance to change, lack of stakeholder engagement, limited access to sustainable resources and regulatory compliance challenges. To address these challenges, the study recommends strategies such as continuous staff development and training, enhanced community and stakeholder engagement, governance through transparency and ethics, and increasing investments in sustainable technology. The study concludes that while ESG initiatives contribute to profitability, Zambian Breweries Plc should prioritize social investments while strengthening governance and environmental initiatives.