ESG in Investing: A Cross-Country Study

Abstract

Objectives:

The main objectives of this study were to compare the variation and impact of ESG on an international level and two countries: Finland and Vietnam. Zooming inside, each pillar E, S, and G, might not have equal weights on overall ESG on the company’s financial performance. Through an empirical study, the paper aims to measure the correlation between ESG and general business practices and if it is a well-founded index.

Summary

Valid data records from publicly listed firms in Finland and Vietnam in 2022 retrieved from Asset4 – Thomson Reuters were the sample for the analysis. A regression model was built based on previous studies, and modifications are introduced along the way. In general, the differences in ESG practices are discussed in the literature review and raised hypotheses are tested using quantitative data.

Conclusions

In Vietnam, there are no signs of significance in the correlation between ESG and CFP, whereas Finland showed a slightly negative relationship between the two. It was discovered that country-specific factors significantly influenced ESG performance in both nations. According to the findings, ESG elements should be taken into account by businesses, investors, and decision-makers who support sustainable growth. In order to establish the causal link that ESG can exert on financial performance over time, future research might shift the focus to the impacts of various ESG determinants on financial performance, cross-country comparisons, and longitudinal studies.