The Impact of ESG Factors on Companies' Financial Performance

Student: Maxim Kozlov

Faculty: International College of Economics and Finance

Educational Programme: International Programme in Economics and Finance (Bachelor)

Year of Graduation: 2024

The research paper is aimed at finding the true relationship between environmental, social, and governance (ESG) factors and companies’ financial performance. The sample is based on the data retrieved from the Refinitiv database on 304 US companies out of S&P 500 list for the period from 2015 to 2022. The study uses multiple linear regression analysis to establish the link between the combined ESG score and Return on Assets (ROA) – as a measure for financial performance. Besides, it is also concerned about the particular pillars of ESG which might have distinct effects. As a result, the ESG score of the previous period had a positive impact on ROA, and only the environmental and social pillars were credited for this effect. The findings of the paper will be relevant for companies’ managers, investors and policymakers since the ESG topic is found to be of high significance in today’s world.

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