The Impact of ESG Factors on the Financial Performance and Investment Attractiveness of Russian Companies

Modern companies are increasingly incorporating environmental, social, and governance (ESG) factors into their business strategies in order to create sustainable development. With their help, companies try to generate value not only for their shareholders, but also for all stakeholders: employees, customers, creditors, suppliers, and even government representatives. However, there is still much discussion in the academic community about the effectiveness of these measures and their impact on financial performance and investment attractiveness of companies. This is why it is relevant to study the impact of ESG factors on Russian companies' financial performance and their investment attractiveness over the three years from 2018 to 2022. The study is based on a sample of 22 Russian companies that were included in the ESG rankings of the RAEX agency over this period. These companies are chosen because they represent a diverse range of industries and sizes, providing a more comprehensive understanding of the impact of ESG practices on financial outcomes. The hypotheses tested during the analysis related to a financial indicator such as return on assets. The Tobin’s Q and dividend payout were used as an indicator of investment attractiveness. A special feature of the study was considering the influence of not only the overall ESG assessment, but also each ESG factor on these indicators individually. This allowed us to determine the most significant aspect for a company's business activity