Title: The ESG-firm profitability nexus: empirical evidence from the Gulf Cooperation Council

Authors: Chokri Zehri; Latifa Saleh Ben Ammar

Addresses: Department of Finance, College of Business Administration in Hawtat Bani Tamim, Prince Sattam Bin Abdulaziz University, Al-Kharj 11942, Saudi Arabia ' Department of Physics, College of Sciences and Humanities in Al-Kharj, Prince Sattam bin Abdulaziz University, Al-Kharj 11942, Saudi Arabia

Abstract: In the Gulf Cooperation Council (GCC), where economic diversification is paramount, aligning environmental, social and governance (ESG) commitments with financial performance presents a critical challenge for firms. This study investigates this nexus by analysing a panel of 220 non-financial GCC firms from 2011 to 2024 using a dynamic GMM methodology. We find that while a positive baseline relationship exists between ESG and profitability, this link is not automatic. Instead, the financial returns are amplified by two internal firm-level mechanisms: the presence of a formal corporate social responsibility (CSR) strategy and greater board gender diversity. These findings are robust to alternative model specifications, performance measures, and industry-adjusted ESG scores. Further analysis reveals contextual heterogeneity, where strategic formalisation is paramount in the energy sector, while governance diversity drives value in non-energy sectors. Policymakers need to move beyond disclosure mandates to require integrated sustainability strategies and enforce governance reforms, adopting a targeted approach that supports small and medium-sized enterprises and imposes higher strategic standards on the energy sector.

Keywords: ESG performance; profitability; Gulf Cooperation Council; GCC; sustainability strategy; corporate governance.

DOI: 10.1504/WRSTSD.2026.155356

World Review of Science, Technology and Sustainable Development, 2026 Vol.20 No.3, pp.297 - 317

Received: 27 Dec 2025
Accepted: 12 Mar 2026
Published online: 30 Jul 2026 *

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