Analysis of Trends of the Influence of ESG Factors on the Financial Results of Companies

This research investigates the impact of Environmental, Social, and Governance (ESG) factors on the corporate financial performance of companies, focusing on revealing the existing trends. Using panel data from 2014 to 2023, the study examines the relationship between comprehensive ESG scores and financial metrics such as ROA, ROE, Tobin’s Q, and EV/EBITDA. The analysis reveals that while the overall ESG score's impact is nuanced, individual components like environmental and governance scores have significant effects. Environmental scores often show a negative short-term impact due to high initial costs. Governance scores demonstrate mixed influences, balancing financial stability with administrative costs. Temporal analysis indicates a shift in ESG impact post-2019, reflecting regulatory changes and change of economic and political environment. Sectoral differences highlight that industrial firms are more affected by ESG factors compared to non-industrial firms. Geographically, companies in developed regions, particularly Europe and North America, benefit more from positive ESG practices than those in developing areas. The study provides insights for integrating sustainability into corporate strategy, emphasizing the complex and evolving nature of ESG factors on financial performance.