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The impact of ESG factors on financial efficiency: An empirical analysis for the selection of sustainable firm portfolios

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  • Gianpaolo Iazzolino
  • Maria Elena Bruni
  • Stefania Veltri
  • Donato Morea
  • Giovanni Baldissarro

Abstract

Environmental, Social, and Governance (ESG) factors are increasingly at the center of corporate and investment decisions. In this context, the aim of the paper was to test whether ESG factors impact on financial efficiency of a sample of firms belonging to different European sectors. This study enriches the literature of the field through a multi‐sectoral analysis. The Data Envelopment Analysis was used as widely considered in empirical and financial studies. Research findings showed that ESGs impact on firm efficiency differently over sectors: some of them are more sensitive than others to ESG factors. Furthermore, for most sensitive sectors the risk‐return characteristics related to ESGs were represented in order to provide insights for investors aiming to construct efficient and sustainable firm portfolios to invest in.

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  • Gianpaolo Iazzolino & Maria Elena Bruni & Stefania Veltri & Donato Morea & Giovanni Baldissarro, 2023. "The impact of ESG factors on financial efficiency: An empirical analysis for the selection of sustainable firm portfolios," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(4), pages 1917-1927, July.
    • Handle: RePEc:wly:corsem:v:30:y:2023:i:4:p:1917-1927
    DOI: 10.1002/csr.2463
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    3. Muhtar Sapiri & Aditya Halim Perdana Kusuma Putra, 2023. "Causality of Bank Financial Performance, Green Bond, CSR, Green Financing Portfolio and CO2 Emissions in Transportation: Evidence from Indonesia," International Journal of Energy Economics and Policy, Econjournals, vol. 13(6), pages 511-522, November.
    4. Rojo-Suárez, Javier & Alonso-Conde, Ana B. & Gonzalez-Ruiz, Juan David, 2024. "Does sustainability improve financial performance? An analysis of Latin American oil and gas firms," Resources Policy, Elsevier, vol. 88(C).
    5. Mohamad Azwan Md Isa & Norashikin Ismail & Mohd Halim Kadri, 2024. "Sustainability Performance and Corporate Financial Stability of Shariah-Compliant Companies in Malaysia: The Moderating Effects of Ownership Concentration," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(14), pages 28-46, October.
    6. Marina Nazir & Minhas Akbar & Xiaohong Yu & Ammar Hussain & Libuše Svobodová, 2024. "Environmental, social, and governance performance as an influencing factor of financial sustainability: Evidence from the global high‐tech sector," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(5), pages 4746-4758, September.
    7. Cao, Qiang & Zhu, Tingting & Yu, Wenmei, 2024. "ESG investment and bank efficiency: Evidence from China," Energy Economics, Elsevier, vol. 133(C).
    8. Lo, Huai-Wei & Lin, Sheng-Wei, 2023. "Identifying ESG investment key indicators and selecting investment trust companies by using a Z-fuzzy-based decision-making model," Socio-Economic Planning Sciences, Elsevier, vol. 90(C).
    9. Gołębiewski, Jarosław, 2023. "Znaczenie i Istota ESG w Sektorze Żywnościowym w Polsce," Roczniki (Annals), Polish Association of Agricultural Economists and Agribusiness - Stowarzyszenie Ekonomistow Rolnictwa e Agrobiznesu (SERiA), vol. 2023(1).
    10. Paolo Esposito & Zubair Ahmad & Vincenzo Riso & Noman Mustafa, 2024. "Beyond the business case? Retracing the walk of Corporate social responsibility and financial performance relationship in the Oil and Gas sector," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(3), pages 2211-2224, May.
    11. MCarmen Martínez‐Victoria & Alfons Oude Lansink, 2024. "Risk and return efficiency of manufacturing firms: Integrating corporate social responsibility performance," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(5), pages 3735-3744, September.

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