Title: The Impact of Environmental, Social and Governance Indicators on the Profitability of Companies in Southern Europe*
Authors: Diana-Mihaela Sandu and Ioana Radu (Gobeaj?)
Volume: 9
Issue: 2
Pages: 46-53
Publication Date: 2025/02/28
Abstract:
In recent years, there has been an increasing discourse surrounding sustainable investing. Since the COVID-19 pandemic, companies have progressively prioritized the disclosure of ESG (Environmental, Social and Governance) indicators. The primary cause is the rapid progression in society of ESG score disclosures by companies, as well as the significance of the ESG score in society. Thus, this study analyzes the impact of environmental, social and governance factors on the financial and economic profitability of companies based on 195 enterprises in Southern Europe (Italy, Malta, Portugal and Spain). The analysis is carried out over 10 years (2014-2023), a period that includes the Sars-Cov-2 pandemic. It is found that there is an insignificant relationship between two components of the ESG score, namely the environmental score and the governance score, with respect to performance indicators. Another strong finding of the study is the negative and econometrically significant link between the ESG score and the performance indicator.