ESG Scores and Company Financial Performance in the United States

Abstract

This objective of this thesis was to examine the relationship between financial performance and environmental, social, and corporate governance (ESG) scores in the United States over the time period 2003 to 2022. The increasing popularity of ESG investment in recent years has highlighted the need to comprehend the effects of ESG elements on financial performance in this setting, which is what drove this research purpose. Financial performance is measured by ROA, and the independent variables is measured by Refinitiv Eikon’s ESG scores. After conducting a fixed effects regression and the interpretation of the correlation matrix, it can be concluded that higher ESG score has a statistically significant negative effect on financial performance for US companies, specifically when measured by ROA.