Value Relevance of Environmental, Social, and Governance (ESG) Performance: Evidence from the Nordics

Sammanfattning: This study looks at the value relevance of ESG performance factors in Nordic companies during the period 2014 to 2018. Data are collected from the Resility Nordic Compass Sustainable Economics Datasets, Finbas and S&P Capital IQ. Relationships of market value of Nordic companies and corporate ESG performance are explored. Results of this study show that companies adopting ESG practices to a greater extent in social and governance dimensions in their company operations perform better in the stock market. Their equities have a higher market value in the stock market where the companies are listed. However, there is no evidence from our study to support the value-enhancing effect of environmental performance. ESG factors has been gaining attention from firms, investors, and the public. The results of this study shed light on the importance of incorporating ESG factors into company operating strategies. Evidence from this study support the theory of adopting corporate social responsibility is beneficial to the long-term sustainability of the business.