ESG Practices and Financial Performance: Evidence from the B3

Abstract

This research aims to investigate the relationship between ESG (Environmental, Social, and Governance) indicators and corporate financial performance. Based on a sample of 60 companies listed on the B3 from 2012 to 2019 — representing a pre-pandemic period — seven econometric models were estimated using panel data regressions. The variables were classified into ESG metrics, financial indicators, and control variables. Socio-environmental performance data were collected from the CSRHub Consensus ESG Ratings database, while financial data were extracted from balance sheets and income statements available on the Securities and Exchange Commission of Brazil (CVM) website. The results evidenced that the environmental dimension negatively impacts financial performance, as measured by Earnings Per Share (EPS), possibly due to the non-immediate financial return on such investments. Conversely, governance showed a positive relationship with EPS, indicating that sound corporate practices contribute to organizational results. Additionally, significant negative effects of financial performance variables on the overall ESG indicator were found. The study suggests further investigation into these interactions and distinguishes itself from previous literature by presenting evidence that contrasts with the assumptions of Stakeholder Theory.