Financial Performance and ESG in the Nordics

Abstract

This thesis investigates the relationship between Environmental, Social, and Governance (ESG) performance and financial performance among publicly listed companies in the Nordic region between 2018 and 2023. While ESG has gained increasing attention globally, existing research shows mixed results regarding its financial implications. The role of ESG data providers in shaping these results remains underexplored. The purpose of this study is twofold: first, to examine whether a significant relationship exists between ESG and financial performance in a Nordic context, and second, to assess whether the choice of ESG data provider influences the outcome of such analyses. Using panel data regressions, financial performance is measured through both accounting-based (Return on Assets) and market-based (log-transformed Tobin’s Q) indicators. ESG performance is assessed using ratings from three major providers: Refinitiv, Bloomberg, and MSCI. The results reveal a predominantly negative relationship between ESG scores and financial performance, though the direction and significance of this relationship vary considerably across data providers. Refinitiv’s ratings exhibit a significant negative relationship with both ROA and Tobin’s Q. Bloomberg’s scores are only significant for Tobin’s Q, while MSCI shows limited significance. Statistical tests including ANOVA and correlation analyses confirm substantial differences in ESG ratings across providers. These differences appear to stem from methodological choices related to data collection, weighting, and scoring frameworks. This suggests that ESG ratings are not objective or interchangeable measures. Consequently, conclusions about ESG’s financial impact depend heavily on which data source is used. This thesis highlights the need for greater methodological transparency in ESG assessments and emphasizes the importance of critically considering the data foundation when evaluating ESG’s economic relevance. The findings carry important implications for both academic research and practice, particularly for investors, firms, and policymakers seeking to interpret ESG-related financial insights. Future research is encouraged to extend the analysis to larger and more global markets and to further explore how methodological differences across ESG providers shape empirical results.