ESG – corporate financial performance nexus: the moderating role of sector risks in the European Union

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School of Business | Bachelor's thesis
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Date

2025

Department

Mikkelin kampus

Major/Subject

Mcode

Degree programme

(Mikkeli) Bachelor’s Program in International Business

Language

en

Pages

36

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Abstract

With the rising awareness of sustainability, several concepts have emerged as efforts to shape the framework while also trying to link sustainability to other concerns, including the interplay of Environmental, Social, and Governance (ESG) with Corporate Financial Performance. However, despite several studies in the field, the results of this relationship have been mixed, which could be due to several contextual factors. This paper, with a focus on the European Union (EU), which is always at the forefront of sustainability practices, dived into specific risks at the sectoral level as defined by the Industry Classification Benchmark (ICB) and S&P Global Ratings (2019) to account for the variations in the nexus. Based on data from companies in the sectors of banks and oil, gas & coal, analyses showed that not only are the results of insignificance inevitable, but the relationship can be negative. Besides, the moderating effect of sector risks seemed to be unable to be detected in this context when explaining the variations of the ESG-CFP nexus.

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Thesis advisor

Derichs, David

Keywords

ESG, EU, CFP, sector risks

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https://urn.fi/URN:NBN:fi:aalto-202505113608

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