Wpływ zrównoważonych finansów na wartość rynkową spółek publicznych w Unii Europejskiej i Wielkiej Brytanii
The Impact of Sustainable Finance on the Market Value of Public Companies in the European Union and the United Kingdom

Author(s): Adrian Gawęda
Subject(s): Economy, Business Economy / Management
Published by: Wydawnictwo Uniwersytetu Łódzkiego
Keywords: Sustainable finance; ESG; ESG results; market value; European Union
Summary/Abstract: According to the traditional approach to finance theory, one of the primary objectives of a company is to maximize its market value, more precisely, shareholder value. A company should not take into account the externalities generated by its activities, as its only social responsibility is to act in its own interest, as long as complying with regulations. Partly as a result of companies operating in accordance with these assumptions, global problems in the environmental, social, and governance (ESG) dimensions have emerged or intensified. This created a need for a paradigm shift regarding the objective of corporate activity and contributed to the development of sustainable finance. The aim of this study was to assess the impact of ESG performance on market value of listed non-financial companies traded on regulated stock exchanges in the European Union member states and the United Kingdom during 2010–2022 period. ESG performance has negative impact on company market value, which differs from the dominant findings reported in the existing literature. Among the environmental (E), social (S), and governance (G) area, the strongest impact on market value was observed in terms of E. The contribution of this study to the literature consists of: (i) establishing an original definition of sustainable finance, (ii) systematizing the concept of ESG, and (iii) applying a comprehensive approach to assessing the impact of ESG performance on market value by incorporating both the overall ESG score and the individual E, S, and G scores into the analysis. The originality of the study stems from combining the traditional company market value model with ESG performance measures and extending the Ohlson Valuation Model by incorporating non-financial variables.

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