The relationship between ESG and binancial performance in brazilian companiesPurpose The aim of this research is to analyze the relationships between the environmental, social, and governance (ESG) dimensions and the financial performance of listed companies of the Corporate Sustainability Index (ISE) of the Brasil, Bolsa, Balcão (B3) Stock Exchange.
Design/methodology/approach The research sample consists of data from 46 companies from 2016 to 2020, resulting in a panel with 159 observations. Panel data regressions with mixed modeling were adopted to analyze the relationships between each ESG dimension and the interaction between the three ESG dimensions and financial performance, measured by ROA, ROE, and market value.
Findings The findings show a positive and significant relationship between the social dimension and ROE. This study reinforces stakeholder theory as a framework for analyzing ESG performance and its relationship with financial performance.
Practical implications The managerial contribution presents evidence that the strategic practices for relationship and value creation for stakeholders contribute to financial performance.
Originality/value This research contributes with evidence of a positive relationship between the social dimension and financial performance, analyzing the relationship between the ESG factors and financial performance in Brazilian ISE companies. It also reinforces the context of emerging markets in analyzing ESG and financial performance. Finally, it provides a structured analysis of ISE/B3 data, which allows the identification of the ESG practices of Brazilian sustainability index companies.
Financial performance; Environmental; Social; Governance; Stakeholders
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Source: Elaborated by authors