Environmental, Social And Governance Criteria Research Articles

Sustainability and firm value: A multivariate regression analysis in the clothing industry

Firms, recognizing their Corporate Social Responsibility (CSR), are becoming catalysts for societal change by integrating Environmental, Social and Governance (ESG) criteria into their activities. The fashion industry exemplifies this effort, with an increasing number of companies embracing sustainability and ethical practices. In this context, our purpose is to provide a clear and comprehensive picture of the link between sustainability and business performance in the fashion industry. This work presents a Multivariate Regression Analysis, scrutinizing both external perspectives through stock prices and internal perspectives via profitability indices. Our aim is to discern the intricate relationship between sustainability practices and financial performance within the fashion industry, aligning ESG criteria with long-term economic success. Our regression analysis reveals a significant positive correlation between ESG scores and stock prices, indicating investor recognition of ESG performance as a crucial investment criterion. However, when focusing internally on profitability, the ESG score does not exhibit statistical significance, suggesting a yet-to-be-established connection between ESG policies and corporate profitability. This study underscores the evolving role of companies as sustainability promoters, emphasizing the crucial role of ESG performance in shaping investor perceptions. Nevertheless, it also highlights the need for further exploration into the intricate relationship between sustainable policies and corporate profitability. As businesses increasingly embrace sustainability, in fact, it could become paramount for informed decision-making and fostering ethical societal and environmental progress.

Developing Islamic-sustainable and responsible investment (i-SRI) criteria based on the environmental, social and governance (ESG) concept

Purpose The practices of sustainable and responsible investment (SRI) among Islamic financial institutions (IFIs) nowadays still rely on the existing environmental, social and governance (ESG) criteria. However, based on observation, some of the existing criteria listed by the reports of certain authorities and organizations do not seem to be aligned with Shariah principles. Therefore, this study aims to investigate those criteria to help develop Islamic-SRI (i-SRI) criteria based on the ESG concept. Design/methodology/approach This study adopted the qualitative method via content analysis of documents and interviews with experts. Findings Based on the analysis, a set of i-SRI criteria is developed based on the ESG concept, of which 33 elements are environmental, 50 elements are social and 26 elements are governance issues. Overall, this study finds that there is no obvious contradiction with the Islamic philosophy in the existing ESG criteria, with the exception of four criteria, i.e. promoting human rights, freedom of expression, freedom of censorship and freedom of association under social criteria. These four existing criteria are not aligned with Islamic teaching and not appropriate with Islamic ESG criteria. Practical implications The creation of Islamic ESG criteria can assist relevant authorities to improve the current ESG criteria and to embed an Islamic perspective within it. Originality/value This study developed a set of i-SRI criteria, which may be suitable as a source of reference to relevant parties.

Maturity Stage of ESG (Environmental, Social and Governance) Practices in Hosting Operations Using the MATESG-H Tool

Objective: This study aims to utilize the MATESH-H tool (Oliveira, 2024) to assess the implementation stage of ESG criteria in accommodation operations within Brazilian tourist destinations. Method: The methodology adopted is qualitative and descriptive. We conducted a case study on accommodation in a tourist destination in the state of Rio Grande do Sul, Brazil. Results and discussion: The strategic organization was strategic in the maturity stage 3 (Management), in addition to already having structured processes and significant involvement with ESG principles, going beyond legal obligations. However, the environmental axis was identified as the weak point, being at the lowest level of maturity. This highlights the need to focus efforts on improving environmental practices to achieve systemic evolution. Research Implications: The research suggests that understanding current positioning relative to ESG criteria is crucial for guiding strategic planning and establishing realistic goals for improvement. The application of the MATESG-H tool can contribute to the integration of sustainable practices in accommodation operations and systemically improve hotel management. Originality/Value: This study contributes by highlighting the importance of applying the MATESG-H tool in assessing the level of ESG maturity. In addition to providing relevant information for managers, the research enriches academic, political, and business debates about ESG, encouraging new research and providing performance indicators that are more aligned with the informational needs of organizations.

Does top executive gender diversity matter for the value relevance of ESG controversies? Empirical evidence from European tech firms

Purpose Interest in environmental, social and governance (ESG) controversies is acquiring great relevance in the business and academic communities. Nonetheless, previous studies in the area have devoted little attention to how the market views ESG controversies. Against this backdrop, this paper aims to investigate whether ESG controversies are value-relevant to investors, as reflected in equity values. It also investigates whether top management team (TMT) gender diversity is likely to affect the association between ESG controversies and equity market values in the context of high-tech firms. Design/methodology/approach This paper uses a sample of high-tech firms listed on the STOXX 600 index during the period 2006–2022. The ESG data for the sample is retrieved from the Refinitiv Eikon database. This paper adopts a fixed-effect panel regression to test the hypotheses. Findings Based on the Ohlson’s (1995) valuation framework, the authors find evidence that ESG controversies are associated with a lower market valuation, suggesting that shareholders perceive ESG controversies as conveying negative information about future performance. The authors also find evidence that TMT gender diversity negatively moderates the relationship between ESG controversies and equity values, indicating that TMT gender diversity alleviates the detrimental effect of corporate controversies. These results remain consistent when using the return model of Easton and Harris (1991). Originality/value This paper throws more light on the economic consequences of ESG controversies in European high-tech firms. This is particularly important due to the increasing importance of ESG criteria in guiding investment choices. This paper also adds to the current literature by providing new evidence that the value-relevance of ESG controversies is affected by TMT gender diversity.

Climate change, ESG criteria and recent regulation: challenges and opportunities

The application of environmental, social and governance (ESG) criteria has now become a more than essential requirement in the financial world. Therefore, it is necessary to understand, select and assess the risks of these ESG criteria and evaluate how they can impact a product or investment decision. Thus, the main objective of this article is to analyze ESG (Environmental, Social and Governance) indicators and their potential impacts in the framework of non-financial information. Current regulatory developments, such as the European Corporate Sustainability Reporting Directive (CSRD), are pushing to make ESG indicators (within this triple perspective: social, environmental and governance risks) a key set of information to be used for reporters and users of information. This article will study in further detail the main implications these regulations will have in how corporations will reflect social and ecological footprint information in their external reporting. Since these ESG indicators could have relevant financial impacts on the financial drivers of a corporation, stakeholders will be concerned on how enterprises are dealing with these ESG risks. Therefore, this ESG data will increase transparency and would mean a better understanding on how companies and investors have a sustainability compromise to evolve to a neutral carbon economy. In order to understand a company’s commitment with these ESG criteria, stakeholders would have to assess different aspects of the information reported. In this sense, this article will focus on how credit rating agencies incorporate these risks in their assessments. Credit rating agencies are becoming important actors in the sustainability criteria, as they incorporate ESG risks in their assessments, transmitting the importance of these indicators to investors and to markets. This study will look into the different time horizons between financial profitability and sustainability indicators. Current tendency and huge demand of non-financial indicators do not have the same profoundness, framework and tradition as financial indicators. This could lead to a situation in which it would be necessary a period to adapt both worlds and make them join and connect together in a sense in which one need the other one.

Gender Perspectives on ESG Stocks: Awareness and Engagement in Sustainable Investment Analysis

ESG (Environmental, Social, and Governance) criteria are increasingly significant in evaluating a company's performance and impact. Investors and stakeholders consider these factors when making investment decisions, and gender influences preferences in ESG stocks. This study assesses public awareness and understanding of ESG stocks in sustainable investments, with a focus on gender differences among 380 investors from Kolhapur City, selected using purposive sampling to ensure diversity in age, education, occupation, and socio-economic status. Data analysis through SPSS software and Chi-square tests revealed several insights. Male investors were more actively engaged in stock investments than female investors. Male investors demonstrated higher awareness and consciousness of ESG aspects before investing compared to female investors. Environmental and social dimensions were given more importance than governance when selecting stocks based on ESG criteria. Investors were particularly aware of environmental issues such as a company's carbon footprint, energy efficiency, waste management, and adherence to environmental regulations. Social aspects like labor practices, diversity and inclusion, human rights, and community engagement were also prioritized. However, the governance dimension, which includes understanding of a company's leadership, executive compensation, shareholder rights, and corporate governance practices, was less understood and considered by investors. This is crucial for both genders to make informed investment decisions that align with sustainability goals. As ESG considerations become integral to investment strategies, understanding how different genders perceive and engage with ESG stocks can provide valuable insights for effective sustainability communication and overcoming barriers to adoption.

ESG Risks and Their Impact on the Creditworthiness of Companies

The integration of environmental, social and governance (ESG) criteria into credit risk assessment has gained significant attention recently. Therefore, it is necessary to understand, select and assess the risks of these ESG criteria and evaluate how they can impact company’s creditworthiness. The main objective of this study is to give a thorough overview of the types of ESG risks, their interrelation with credit risk of the company and methodological approaches they can use, along with opportunities for future advancements. The analysis shows that climate change and transition to low-carbon economy provoke two main types of ESG risks – physical risks and transition risks. Both types of ESG risks could affect company’s creditworthiness through its cash flows capital and collateral. In order to assess climate-related types of risks methodologies based on forward-looking scenarios are needed with the employment of data that has not been observed in the past. These results are a basis for further development of methodological architecture of ESG-credit risks.

ESG criteria in green rebuilding of Ukraine

The historical retrospective of the construction industry shows a tendency to move to a qualitatively new level after crises and global upheaval. Global markets are currently being reformatted to reflect new investment priorities, where environmental, social and governance (ESG) criteria are gaining essential importance, and Ukraine is at the center of global transformations. Ukraine's post-war reconstruction plans include the use of green innovative technologies, as the formation of a green economy is the basis of the European Union Association Agreement. The concept of "green recovery" has become widespread, as investments in low-carbon technologies strengthen the country's resilience. Implementation of green building principles saves resources and energy, stimulates innovation and competitiveness, and increases the confidence of investors and increasingly conscious consumers. Current international trends are moving towards global decarbonization of the world economy and the widespread implementation of ESG non-financial reporting standards to screen and increase transparency of business. The construction sector plays a key role in achieving the Sustainable Development Goals, given the significant economic, environmental and social impacts of the construction industry. The requirements for decarbonization, safety and well-being of buildings are growing, and the increasing volume and complexity of data requires new tools and approaches. The application of ESG principles involves the creation of long-term sustainable value in the interests of the company and its stakeholders. In the construction sector, ESG factors are crucial for determining the overall value and potential of a property, which helps investors to obtain more information for decision-making and risk assessment. The use of (ESG) indicators ensures transparency, objectivity and measurability of the company's performance. Businesses that demonstrate concrete commitments to sustainable development will become undisputed leaders in their industries in the next 30 years and will gain access to investment capital. On the other hand, companies that do not take care of compliance with international standards in a timely manner risk losing business in the medium term.

The impact of environmental, social and governance (ESG) score on dividend payment of large family firms: What is the role of financial constraints? International evidence

AbstractThis article studies the relationship between environmental, social and governance (ESG) score and dividend payment for 274 large family firms in the period 2015–2021. This research has three contributions to the literature. First, to the best of our knowledge this is the first article to focus on large family firms considering their greater importance in stock ownership around the world. Second, this sample covers both developed and emerging nations. Third, our study not only establishes a connection between ESG (Environmental, Social, and Governance) criteria and dividend payments but also considers how financial constraints moderate the relationship between ESG scores and dividend payments. The results indicate a positive influence of ESG scores on dividend payments. Furthermore, financial constraints of family firms are negatively related to dividend payments. Finally, the moderating effect of financial constraints on the relationship between dividend payment and ESG show that for high levels of financial constraints that dividends are less sensitive to ESG score. The opposite effect is reported when firms show low levels of financial constraints. Practically speaking, the study demonstrates the value of creating a dividend policy that is in line with the ESG score because they are complementary signals. Additionally, it is important to consider financial limitations when planning financial reserves in family firms. This is due to the diminished correlation between ESG score and dividend payments in the presence of financial constraints.

Fuzzy clustering approach to portfolio management considering ESG criteria: empirical evidence from the investment strategies of the EURO STOXX Index

Environmental, social and governance (ESG) criteria are becoming increasingly important in the construction of investment portfolios. Analysis of the investment markets confirms that these criteria are being actively integrated into investment strategies. This paper presents our approach to incorporating ESG criteria into the portfolio construction process based on an index investment strategy. This strategy is enhanced by the inclusion of ESG criteria in the form of ESG scoring. Investment portfolio construction focuses on the application of three criteria: maximizing ESG score, minimizing risk and maximizing expected return. Our approach applies a fuzzy clustering toolkit to the set of index components. In the resulting fuzzy clusters, their core part (companies that do not belong to other clusters) and the fuzzy part are separated. The proposed investment strategy involves the construction of portfolios with a variation of the components of the fuzzy part. A VAWI (Value Added Weekly Index) curve is designed for each portfolio. The optimal strategy is implemented by constructing and reconstructing portfolios according to the upper line of the VAWI set. This investment strategy is demonstrated using the example of the EURO STOXX 50 index, which includes large companies from 11 Eurozone countries.

Three contradictions between ESG finance and social housing decarbonisation: a comparison of five European countries

The regulation of financial markets according to Environmental, Social and Governance (ESG) criteria has become a priority for the European Union (EU). Recent legislation, such as the EU Green Taxonomy, aims to identify sustainable investments enhancing transparency and accountability while steering private finance toward environmental objectives. The introduction of ESG criteria poses specific questions for Social Housing Organisations (SHOs), particularly as the decarbonisation of the housing stock is also incorporated into national legislation. This article contributes to the social housing finance literature by breaking ground on ESG, an area of intensive legislative activity currently re-shaping financial markets. The study draws from interviews with SHOs’ finance directors, banking officers, rating agencies and public officials to answer the question: How does the introduction of ESG legislation affect the financing of social housing decarbonisation? First, the results show that ESG legislation is broadening reporting responsibilities while producing only limited additional finance ultimately geared towards large and commercially oriented SHOs. Second, the expansion of energy-efficiency requirements is resulting in higher costs creating tensions with SHOs’ social mission of building homes at affordable rents. Third, the adoption of ESG financing is producing inequalities in access to capital across national financing systems and individual providers.

Effect on Environmental, Social and Governance (ESG) Criteria on the Firm Profitability of Listed Companies in Malaysia

This paper analyzes the effect of ESG criteria on the firm profitability among Malaysian listed firms. Firm-specific variables such as firm size, revenue growth, and leverage were also included in the analysis. A total of 42 companies from Bursa Malaysia are selected from Bloomberg’s database that has complete ESG scores data from 2011-2021. Firm profitability was measured using ROA and ROE. Using panel data analysis, this study found that ESG scores have a significant positive influence on firm profitability. Meanwhile, Social Score individually has a significant negative impact on firm profitability. Individual Environment and Governance scores do not have a significant relationship with firm profitability. Leverage and firm size significantly negatively affect firm profitability.

Exploring a Shared Benchmark for Measuring ESG Performance

The evolution of ESG (Environmental, Social and Governance) criteria is an ever-growing process. The relevant organizations and bodies have started to develop ad hoc initiatives and guidelines for the assessment and measurement of ESG criteria using different lines of assessment. As a result, investors have begun to use these indices as tools to direct their investments towards companies that stand out for the careful and enlightened use of environmental, social and governance variables. Subsequently, the ESG criteria were further refined and standardized, with the goal, not always achieved, of producing consistent and reliable measurements. The diversity of the nature of the companies, the sometimes difficult and inadequate reporting of certain information, combined with the lack of standardization of the results obtained, have made it impossible to produce an index that can be applied transversally to all or most of the companies. The objective of this work is therefore to propose a benchmark as useful as possible to standardize the results, in order to have a potential reference index for comparing the results of companies also operating in different sectors and with different characteristics.

ESG consideration in venture capital: drivers, strategies and barriers

PurposeThere is an increasing awareness of environmental, social and governance (ESG) factors in the private equity (PE) environment. While many studies deal with the implementation of ESG in the field of PE, only little is known about how the subcategory venture capital. Therefore, this study aims to answer the questions: What are the motivations for venture capitalists to consider ESG in their investment decisions? How do they implement it and what are the barriers that hinder them?Design/methodology/approachAn inductive study based on semi-structured interviews with 11 investors of venture capital firms (VCs) was conducted to explore the drivers, the barriers and the strategies to implement ESG in the investment decision-making.FindingsAll investors perceive that ESG will play a major role in investment decisions in the long term. VCs have seen benefits primarily in terms of performance and commercialization of startups that incorporate the ESG aspect. Limited partners are a driving force for change in this process. No standardized framework and lack of resources for implementation are mainly assumed as barriers.Practical implicationsPolitics and industry might support particularly smaller VCs in their implementation by providing standardized frameworks. Owing to increasing awareness and interest of ESG criteria among VCs, startups should also address these criteria.Originality/valueThis paper contributes to the literature by examining how ESG is currently considered in VCs’ decisions and what challenges they face. Therefore, this research contributes to the understanding of the decision-making process among venture capitalists.

Human Capital as a Key Factor for Organizations’ ESG Goals

The integration of Environmental, Social and Governance (ESG) standards and principles in the development strategy is the organization’s commitment for long-run and inclusive sustainability. These pillars are currently important priorities for stakeholders, managers and policymakers. Thus, the main objective of this empirical work is to analyze the extent to which European companies currently manage to fulfill certain specific requirements related to ESG and the role played by highly qualified human capital in this process of sustainable development. To achieve this goal, a diverse research methodology will be used, consisting of critical comparative analysis of the specialized literature, interpretation of statistical data, and econometric analysis. Our analysis is based in particular on European companies data from various fields of activity and different sizes, extracted by Eurofound through a complex survey. The main results demonstrate how European Union Member States are clustered and ranked based on different ESG pillars, with Sweden, Denmark, Estonia or Finland as the best performers and Greece and Cyprus as the weakest performers. At the same time, the research highlights the limited role of highly qualified human capital in supporting the development of the ESG pillars included in the analysis. We also pointed out the effect on companies' competitiveness and resilience, as well as the need for underperforming companies to integrate human capital in the process of long-term sustainable and inclusive development, being the basic resource of any organization. The article may have a contribution to the literature because it demonstrates how EU Member States can be grouped according to specific ESG criteria of domestic companies, and also the role of highly qualified in boosting these criteria. Our study also may have possible practical implications, both for the academic environment, and also for the managers involved in the development of the business sector. We consider that our empirical results may contribute to the decision-making process regarding the future investments of the organizations.

Impact of ESG on Bank Performance and Risk Around the COVID-19 Pandemic

Financial institutions’ focus on using ESG (environmental, social, and governance) criteria in decisions has grown significantly over time despite growing controversy over its use. Prior papers have not solved the controversy as they have found mixed results of the benefits of ESG activity. Further, there may have been structural changes that accompanied the pandemic’s period of economic stress. The paper examines the relation between ESG scores and financial institutions’ risk and performance measures. Pre-pandemic changes to ESG and its components are regressed on pandemic-period changes in ROA, ROE, and Tobin’s Q for performance and the loan-to-deposit ratio for risk. Changes to ESG are negatively related to the subsequent performance of ROA. However there appears to be no significant relation between changes in ESG and changes to other measures of performance. Finally, when looking at the loan-to-deposit ratio, there is evidence that changes in the environmental factor, the social factor, and the overall ESG score has a significant and negative relation. That suggests ESG score improvement is associated with lower risk. Although financial institutions improving their ESG scores is associated with subsequent risk reduction, that does not appear to have a positive performance impact.

Comments: Economic Realities of Energy Transition

No one expected the energy transition to be without hiccups, and recently, those hiccups have been heard within and outside the oil and gas industry. Daniel Yergin, vice chairman of S&P Global and author of several books, wrote how previous energy transitions evolved over the course of a century or more and did not “wholly displace the incumbent technologies.” Oil became the world’s No. 1 energy source in the 1960s, bumping coal from the top. “ … Yet we now use three times more coal than we did back then, with global consumption hitting a record high in 2022,” he noted. He continued, “By contrast, today’s transition is intended to unfold in little more than a quarter century and not be additive.” Yergin cited a 2021 paper by Jean Pisani-Ferry, an economist at the Peterson Institute for International Economics, who wrote that moving too rapidly to net-zero emissions could precipitate “an adverse supply shock—very much like the shocks of the 1970s” and that it “is unlikely to be benign and policymakers should get ready for tough choices.” The outcome of those tough choices is becoming evident, both in policy and companies’ actions. For example, Equinor put an indefinite hold on its plans for a floating offshore wind farm, Trollvind. Initially planned to have an installed capacity of about 1 GW and annual production of 4.3 TWh, the electricity was to be used to run the Troll and Oseberg fields. The operator cited “challenges facing the broader offshore wind industry,” including how rising costs changed its original view that Trollvind would not require any financial support. “It is no longer a commercially sustainable project,” Equinor said in a statement. It added that the unavailability of preferred technology made the concept less viable and that the proposed timeline was not achievable to the level required to go forward. Shell recently pulled out of the Northern Endurance Partnership, Britain’s CCS project targeting industrial decarbonization. Another equity holder, National Grid, also withdrew from the project, dropping its plans to construct pipelines to transport the CO2 to the North Sea. The equity holdings were acquired by the remaining project partners, BP, Equinor, and TotalEnergies. The need for return on investments (ROI) was highlighted in a survey of global energy and natural resource executives by Bain & Co. in May. The responses showed executives believe their companies are outperforming the rest of the world in reducing emissions but expect the rate of decarbonization to slow down over the next few years. The surveyed companies expect to deploy about a quarter of their capital on new growth businesses in 2023, many of these focusing on low‑carbon technologies. The executives aren’t concerned about accessing capital for low-carbon businesses, but “need to ensure adequate returns on the investments.” Four out of five executives considered the ability to create acceptable returns on projects a main barrier to decarbonization. Customers demonstrate an unwillingness to pay—not universally, “but enough to make it hard to scale low‑ carbon businesses.” They look to government policy and regulatory support to help bridge the gap. Complicating ROI is how it is perceived in the eye of the investor. What investors value is not limited to the dividends they may receive. Individual and institutional investors are increasingly paying attention to ESG (environmental, social, and governance) criteria. Norway’s $1.4 trillion wealth fund, which invests Norwegian state revenues from oil and gas production, on 26 May said it would vote for shareholder proposals at Chevron and ExxonMobil to adopt a medium‑term Scope 3 greenhouse gas (GHG) reduction target. Scope 3 refers to emissions not produced by the company itself or from its owned or controlled assets, but those it is indirectly responsible for, up and down its value chain. Last year, the fund said it would push the companies it invests in to cut GHG emissions to net zero by 2050, in line with the Paris Agreement. It emphasized that it would not divest from big emitters to achieve these targets and would instead be an “active shareholder” to effect change. “The easy way to cut down emissions is to sell out,” fund CEO Nicolai Tangen said. “But someone needs to own these companies and it does not solve the problem, quite the contrary.” When Shell CEO Wael Sawan discussed the company’s 2022 record profits of $39 billion, he said, “Profit without sustainability erodes our license to operate. Sustainability without profit erodes our shareholder support and financial capacity to play a meaningful part in the energy transition. We must continue to provide energy and do it with fewer emissions. We can only do this with the backing of our shareholders because it is their capital that enables us to invest in the energy transition.”

<p>The Effect of ESG Criteria on Company Valuation: A Quantitative Approach Applied to the O&G Sector</p>

The integration of Environmental, Social and Governance (ESG) criteria implies that they must be explicitly introduced into valuation models and investment decisions. Socially Responsible Investment (SRI) does not take into account this integration, so it is necessary to know the real impact that ESG criteria have on the valuation of actions to carry out effective investment decisions. The approach used is the Value – Drivers Adjustment (VDA) through the Discounted Cash Flow (DFC) method for Shell PLC as one of the most influential O&G companies in the energy transition. The results of the analysis reveal that the impact of ESG criteria on valuation translates into a reduction of 29.11% of its target price. The need for investment and the rising cost of capital explain these result. This results in a more comprehensive valuation method, where ESG criteria are no longer supplementary information and become indirect financial elements.

Доходность ESG-инвестирования на развитых и развивающихся рынках с учетом временного горизонта

The development of the ESG (Environmental, social, and governance) concept has led to the rapid spread of financial instruments for investing in sustainable development on all continents. The purpose of the article is to study the attractiveness of sustainable investing in the developed and emerging markets of America, Europe and Asia, in particular, to conduct a comparative analysis of the returns of market indices based on ESG criteria and those of indices that do not take them into account. Particular attention is paid to the duration of the investment period: the authors studied profitability on time intervals from one to five years. The object of the study is stock indices. The subject of the study is profitability of ESG-oriented and ESG-neutral indices. A comparative analysis of 28 market indices, 15 of which were formed with ESG indicators in the period from 2013 to 2022 led to the conclusion that it is advisable to invest in ESG index funds in both developed and emerging markets, since in more than 50% of cases, the return of ESG indices is higher than that of non-ESG indices. Investments in ESG indices over a longer time horizon tend to have higher returns on invested capital than traditional investments in non-sustainable indices. Analysis of European stock market returns has shown insufficient efficiency of ESG investments and requires additional analysis of the factors that have influenced this. A promising direction for further research is also the analysis of the mutual influence of stock markets of developed and developing countries on financial ESG instruments and indices. The applied value of the study lies in the possibility of using the results of the analysis in the reorientation of Russian investors in the face of sanctions pressure on stock markets in the Asia-Pacific region.

Role of Environmental, Social and Governance (ESG) in the Achieving Sustainable Development Goals: A Brief Review

The United Nations (UN) 2030 Agenda for the Development of Sustainability and the seventeen Sustainable Development Goals (SDGs) serve as a reminder that the achievement of sustainable development has become a worldwide necessity. The idea of ESG (environmental, social, and governance) has gained popularity as an organizational structure for incorporating sustainability issues into business processes and choices regarding investments as the globe struggles with urgent challenges including climate change, inequality, and resource depletion. Standardized measurements and criteria are missing from ESG reporting. It is difficult to evaluate the effect of ESG actions on certain SDGs in the absence of reliable data. Businesses frequently have to choose between several ESG criteria and SDGs. Prioritizing becomes challenging when financial resources that may be used for social projects are needed to solve environmental issues. ESG practices might not be in line with shortterm profit targets, which would cause the emphasis to shift from long-term sustainable development to immediate financial gains. The interconnectivity of social well-being, environmental preservation, and responsible governance is highlighted in this review article, which examines the varied roles that ESG principles play in accomplishing the SDGs.