Exploring the impact of sustainability (ESG) on financial performance (FP): the role of firm size in the different industries.

Abstract

Over the past two decades, research on the impact of ESG capitalization on firm value has been prolific. However, despite numerous studies, there is still no consensus on the relationship between ESG and firm value. This has generated a broad range of theories on the topic. One limitation of these studies is that they largely rely on long-term historical data, which may not be reflective of the current sustainability landscape. Furthermore, the lack of effective regulation on ESG disclosure has made it difficult to draw definitive conclusions from the analysis, as analysts tend to assign low weights to non-standardized information. This may soon change in Europe with the implementation of the Corporate Sustainability Reporting Directive (CSRD) that becomes effective in January 2023. This directive will require around 50,000 major companies and listed SMEs to report on sustainability. The aim of this thesis is to explore the potential relationship between sustainability (as measured by ESG disclosure and performance) and financial performance and analyze how these relationships may differ across industries and company sizes. To do this, all the data will be subdivided by industries and sizes, providing a more accurate and precise analysis.