ESG and Corporate Financial Performance

ESG – The positive impacts on corporate financial performance.

LinkedIn posting by Jorgen Pedersen May 2021.

A number of studies have over time shown positive impact of ESG (environmental, social and governance) criteria on corporate financial performance (CFP).

A study which combines the finding of 2200 individual studies allows for generalizable statements. This study is the most exhaustive overview of academic research done on this topic. The results show that the business case for ESG investing is empirically well founded:

Roughly 90% of studies find a non-negative ESG-CFP relation. More importantly, the large majority of studies report positive findings. To be highlighted, that the positive ESG impact on CFP appears stable over time.

This means that by ensuring ESG being part of your strategic basket, you do something right for the environment and show your social responsibility, at the same time working for the sustainable financial performance of your business.   

At The Birch Tree we are a supporter of ensuring strong business focus on the S for social aspects and engagement. This in addition to the strong focus which often already exists on the environmental aspects. It is our conviction that a holistic view on customer-focused benefits solutions will help companies create sustainable financial performance.

(Meta-Analysis, Friede G, Busch T & Bassen A, 2015)

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