The Effect of ESG Data of Companies on Financial Performance: A Panel Data Analysis on The BIST Sustainability Index

Abstract

The relationship between companies' environmental, social, and governance (ESG) data and their financial performance is of significant interest. The primary aim of this study was to investigate whether the ESG scores of companies in the BIST Sustainability Index impact their financial performance. By analysing the relationship between ESG scores and financial performance indicators of 26 companies, whose ESG scores were calculated by S&P Global for the period 2018-2022, using the panel data analysis method, we found compelling results. ESG factors were found to have a significant and positive effect on return on assets (ROA), return on equity (ROE), net profit margin (NPM), and asset growth (AGR) but a negative effect on the market-to-book ratio (MBR).