Sustainability & Financial Performance: A Study of the Relationship Between Sustainability and Financial Performance in the American Market From 2015-2021

Abstract

This thesis seeks to examine the relationship between sustainability and financial performance in the American market from 2015-2021. The relationship is measured by using a multiple linear regression model including data for bigger publicly traded companies. Sustainability is measured as aggregated scores constituted by Environmental-, Social-, Governance, and ESG-score. Financial performance is measured as both accounting- and market-based measure in the form of ROIC, ROE, EVA, and RI. This thesis pursues to contribute to the existing literature by applying data from a recent period of 2015-2021, including both accounting- and market-based financial measures, and using both the combined ESG-score for sustainability and at the same time using the three single measures that constitute the combined ESG-score. The methodological procedure builds on a deductive approach by constructing a null hypothesis saying that there is no relationship between companies’ sustainability- and financial performance. The statistical model finds that 9 of 16 listed regression models are statistically significantly positive on a 5% significance level. Notwithstanding, the thesis is not able to reject the null hypothesis, saying there is no positive relationship between sustainability and financial performance in the American market from 2015-2021.