The Relationship Between Environmental, Social, and Governance Investing and Financial Performance Metrics
Posted: Sep 11, 2025
Abstract
The integration of Environmental, Social, and Governance (ESG) factors into investment decision-making has emerged as a transformative force in global financial markets. Traditional financial theory has historically treated ESG considerations as externalities or constraints rather than value drivers, creating a theoretical and practical gap in understanding how non-financial metrics influence financial outcomes. This research addresses this gap through an innovative methodological approach that transcends conventional linear analysis frameworks. The fundamental research question guiding this investigation concerns the nature and magnitude of the relationship between comprehensive ESG integration and financial performance metrics, with particular emphasis on identifying the conditions under which ESG factors create, preserve, or potentially diminish financial value.
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