The Impact of ESG Ratings on the Financial Performance of Companies

Today the active integration of environmental, social and managerial responsibility factors in the activities of companies is no longer a new direction, but an important part of the modern business paradigm, developing taking into account the sustainable development agenda. ESG factors are becoming increasingly important in assessing the success and sustainability of companies. Research shows that companies that actively implement ESG practices have higher financial performance than their competitors. The purpose of this study is to study the relationship between ESG indicators and the financial performance of companies in the extractive sector, industrial sector and service sector of the BRICS countries, as well as to evaluate these links. The sample of the research data is a balanced data panel that covers the period from 2014 to 2022 and includes 98 companies from the BRICS countries. As the analysis showed, the ESG rating has a negative impact on the ROA indicator of companies in the BRICS member countries, while this influence depends on the company's affiliation to one of the three economic sectors highlighted in the work.