Impact of ESG on corporate performance: a comparative analysis between developed and emerging markets

Purpose: Compare the impact of ESG (environmental, social and governance) factors on the operational, financial and market performance of companies in developed and emerging markets between 2018 and 2023. Methodology: Using a quantitative approach, financial and ESG disclosure data from 2,546 companies from different sectors in developed and emerging markets were analyzed. Multiple linear regression techniques were applied to investigate the correlation between ESG practices and corporate performance (ROA, ROE and Tobin’s Q), considering variables like company size, leverage and sales growth. Results: The results indicate that emerging markets have a stronger association between ESG practices and financial performance compared with developed markets. Contributions of the Study: This study contributes to the theoretical understanding of the ESG-performance relation and offers insights for public policies and corporate strategies, promoting responsible investments and sustainability. This enables comparative analysis between emerging and developed markets, highlighting the nuances in the implementation and results of ESG practices, with theoretical and practical implications for companies and policy makers.