How ESG Impacts Firms’ Performance? Evidence from China

Abstract

As the ESG concept further develops and deepens, ESG investment gains significance for many investors, agencies, and companies nowadays. The objective of this paper is to investigate ESG scores and its influence on firms’ performance. This paper chooses 82 Chinese corporations from two sectors-technology and mining-to be the selected sample. Using ROA, ROE, and growth rate as indicators of firms’ performance measures, and ESG scores deriving from Bloomberg financial company as indicator of firms’ ESG engagement, result demonstrates that there is a slightly positive correlation between ESG level and financial performance in technology sector. In mining sector, the result contrary to the hypothesis, revealing that the correlation between ESG scores and financial performance is weak. The findings of this paper provide empirical evidence for corporate managers to properly perceive ESG, and help investors evaluate corporation performance using ESG indices.