The Impact of Sustainability Performance on Company Profitability in the COVID-19 Pandemic and Post-Pandemic Context

Abstract

Abstract The current context, dominated by climate change, resource constraints, health and financial crises, the need for continuity and increased profitability of companies, increasing stakeholder interest in environmental risks and non-financial information, requires addressing business from the perspective of environmental, social and governance standards. Companies will therefore integrate their sustainability performance objectives, complementary to their profitability objectives. Thus, the objective of this research is to measure the impact that sustainability performance has on company profitability. The research approach is two-dimensional. The first dimension considers the literature review on conceptual approaches specific to environmental, social, governance standards. The results highlighted the upward trend and the diversity of facets related to environmental, social, governance standards. The second dimension is a quantitative research that aims to measure the impact that sustainability performance (ESG score) has on the profitability of listed companies in Europe. The research data was collected for the period 2020-2022 from the Refinitiv database (LSEG Data & Analytics). The results revealed an increase in interest in sustainability performance of listed companies in Europe, both from the perspective of the reporting companies and in terms of the global average ESG score, during the COVID-19 pandemic and post-pandemic. From the perspective of the regional affiliation of the reporting companies, Southern Europe is the best performing pole in terms of average ESG score, followed by Western Europe, Eastern Europe, Central Europe and the last position is occupied by Northern Europe. The results also showed that the ESG score has a positive but insignificant influence on the profitability of the sampled companies. This research complements the literature, given the topicality and importance of ESG issues, but is also relevant for stakeholders interested in the sustainability of companies' business.