This study investigates the impact of Environmental, Social, and Governance (ESG) practices on the financial performance of European firms, with a specific focus on firms listed on the STOXX Europe 600 index from 2012 to 2018. The objective is to understand the strategic significance of ESG practices and their correlation with financial outcomes. By analyzing a sample of diverse European firms, the study provides a comprehensive overview of the influence of ESG criteria in a unique economic and regulatory context.

The research methodology includes a regression analysis to examine the relationship between ESG scores and Return on Equiry (ROE), while controlling for variables such as firm size, leverage, operational efficiency, and sales growth. The findings reveal a significant positive relationship between ESG performance and ROE, indicating that higher ESG scores correlate with improved financial performance. This result supports the growing body of literature suggesting that sustainable and responsible business practices are not just ethical imperatives but also contribute to financial success.

Additionally, the study contributes to the existing literature by offering a multi-country European perspective, contrasting with previous research predominantly focused on single-country analyses. This approach provides new insights into the relationship between ESG practices and financial performance across different national contexts within Europe, a region recognized for its leadership in sustainability and corporate governance.

The findings have practical implications for business leaders, investors, and policymakers, emphasizing the importance of integrating ESG practices into corporate strategies for long-term financial success. The study also suggests areas for future research, including the exploration of specific ESG components and their individual impacts on financial performance.

Conference Title

Resilient Future: Bridging Innovation, Business Intelligence, and Sustainability in Modern Business

Conference Country

Palestine

Conference Date

April 17, 2024 - April 18, 2024

Conference Sponsor

An-Najah National University and the School of Business - The University of Jordan

Additional Info

Conference Website