| Title: | The Strategic Synergies between Financial and Sustainability Levers：Interaction Effects on Corporate Financial Performance in the Japanese Chemical Industry |
| Author: | Hideki Yamada |
| Advisor: | ดร.วรางค์รัตน์ นิติวนะกุล – Dr.Warangrat Nitiwannakul |
| Degree: | Master of Business Administration |
| Major: | Finance and Accounting |
| Faculty: | บัณฑิตวิทยาลัย (Graduate School) |
| Academic year: | 2568 (2025) |
| Published: | นำเสนอในที่ประชุมวิชาการ (Conference) The 12th International Conference on Green Asia and Sustainability Forum : Innovation, Health Sciences, Digital Education Quality, Productive Employment, Defence Technology and Industry for Sustainable Development in the Next Normal 8 May 2026 Click |
Abstract
This study investigated the strategic synergies between Environmental, Social, and Governance (ESG) performance and financial leverage on corporate financial performance, measured by Return on Equity (ROE), within the Japanese chemical industry. As global capital markets increasingly integrate sustainability criteria, understanding the tangible financial impact of ESG initiatives has become a critical strategic imperative, particularly for high-impact sectors. This research addressed a gap in the literature by examining not only the direct effects of individual ESG pillars but also the moderating role of capital structure in a unique institutional context. Employing a quantitative methodology, this study analyzed a balanced panel dataset of 100 publicly listed Japanese chemical companies over the fiscal years 2022 to 2024—a period marked by significant advancements in Japan’s ESG disclosure regulations. The analysis was theoretically grounded in Resource-Based View (RBV) and Stakeholder Theory, with Agency Theory applied as a complementary framework to explain how capital structure conditions managerial decision-making in ESG investment. The empirical findings, derived from a fixed-effects panel regression model, reveal a nuanced but clear picture. First, Environmental (E) performance demonstrates a strong, positive, and statistically significant relationship with ROE, supporting the RBV proposition that eco-efficiency and environmental innovation are valuable, hardto- replicate resources that enhance profitability. Conversely, Social (S) performance shows no statistically significant effect, and Governance (G) exhibits a weak negative association, indicating that their financial impacts may emerge over longer horizons. The most significant contribution of this study is the confirmation of a positive and highly significant interaction effect between Environmental performance and financial II leverage (D/E ratio). This finding suggests that leverage acts as a strategic amplifier: in firms with higher debt, the positive financial effect of strong environmental performance is magnified. This aligns with Agency Theory, in which the discipline imposed by debt obligations compels managers to select ESG projects with the most certain and measurable financial payoffs. From a managerial standpoint, the findings indicate that sustainability and capital efficiency are not mutually exclusive but complementary. Managers should integrate ESG considerations into capital allocation frameworks, viewing environmental investments as strategic assets rather than discretionary costs. This integration fosters cross-functional collaboration between finance, sustainability, and risk units, enabling firms to achieve sustainability-driven profitability through systemic alignment rather than isolated initiatives. For policymakers, the results highlight the importance of fostering an ecosystem that rewards this strategic integration of sustainability and finance. For investors, the study reinforces the value of a materiality-focused ESG analysis that captures the synergistic interplay between specific ESG pillars and financial structure.
Keywords: ESG performance, financial leverage, return on equity (ROE), Japanese chemical industry, sustainability strategy, Resource-Based View (RBV), Stakeholder Theory, Agency Theory
6717190007 Hideki Yamada, 2568 (2025), Advisor: ดร.วรางค์รัตน์ นิติวนะกุล – Dr.Warangrat Nitiwannakul, สารนิพนธ์ (Independent Study), The Strategic Synergies between Financial and Sustainability Levers：Interaction Effects on Corporate Financial Performance in the Japanese Chemical Industry, นำเสนอในที่ประชุมวิชาการ (Conference): The 12th International Conference on Green Asia and Sustainability Forum : Innovation, Health Sciences, Digital Education Quality, Productive Employment, Defence Technology and Industry for Sustainable Development in the Next Normal 8 May 2026, ปริญญาโท (Master’s Degree), บัณฑิตวิทยาลัย (Graduate School), Master of Business Administration, Finance and Accounting, Siam University, Bangkok, Thailand – มหาวิทยาลัยสยาม กรุงเทพมหานคร ประเทศไทย
