The effect of ESG performance on financial performance of food and beverage companies - Evidece from North America and Europe

Thumbnail Image

URL

Journal Title

Journal ISSN

Volume Title

School of Business | Master's thesis

Authors

Date

2024

Department

Laskentatoimen laitos

Major/Subject

Mcode

Degree programme

Accounting

Language

en

Pages

76+9

Series

Abstract

According to the shareholder theory, a company's only social responsibility is to generate profit for its shareholders. The research on the connection between ESG and financial performance has grown significantly. Most studies indicate a positive or neutral relationship between responsibility and financial performance. Shareholder theory and stakeholder theory might have the possibility to coexist. Most research on ESG and financial performance has focused either on cross-industry analysis or general analysis without digging deeper into any industry. The purpose of this study was to examine the relationship between ESG and financial performance from 2012 to 2023, focusing on companies in the food and beverage industry. The sample is geographically limited to developed markets in Europe and North America, including a total of 90 listed companies from Europe and 81 listed companies from North America. The food industry is a significant sector from a responsibility perspective. Due to its large size, it employs a high number of people and has a significant impact on the world's environment and the well-being of people, both for the employees and for the customers. Geographical comparison in the food industry between Europe and North America is interesting, as regulation is increasing in Europe, whereas in North America, ESG reporting is largely voluntary. By studying geographical differences, it is possible to discover how the coexistence of shareholder theory and stakeholder theory is realized in the food and beverage industry. Additionally, the aim was to determine whether COVID-19 changed the impact of responsibility on financial performance. In other words, is responsibility considered important even during crises? The results of the study provide new information on the impact of responsibility on financial performance in the food industry in developed markets. Financial performance was measured using both a short-term profitability indicator (ROA) and a long-term market-based indicator (Tobin’s Q). The studies show that there are very few statistically significant connections between ESG and ROA in F&B sector. In contrast, there are many significant connections between ESG and Tobin’s Q, which vary greatly depending on the pillar, continent, and different areas of the food industry. COVID-19 showed significant effects on the relationship between ESG and financial performance, especially in Europe.

Description

Thesis advisor

Sihvonen, Jukka

Keywords

food industry, ESG, profitability, Europe, North America

Other note

Citation

Permanent link to this item

https://urn.fi/URN:NBN:fi:aalto-202408185534

Collections

[gradu] Kauppakorkeakoulu / BIZ