The Impact of ESG Integration on Firms' Financial Performance and Corporate Value
The Impact of ESG Integration on Firms' Financial Performance and Corporate Value

Author(s): Katerina Vojcheska-Nikodinoska
Subject(s): Economy, Business Economy / Management
Published by: Институт за икономически изследвания при Българска академия на науките
Summary/Abstract: This research examines how environmental, social and governance integration affects firms' financial performance and corporate value in Bulgarian enterprises. The research examines mechanisms through which ESG affects profitability, cost of capital and valuation. The analysis incorporates evidence from the literature highlighting the positive financial outcomes of sustainability-oriented strategies. Particular attention is given to the European Union taxonomy for sustainable activities, the Corporate Sustainability Reporting Directive, and the International Sustainability Standards Board framework. The contribution of this paper lies in presenting empirical evidence on the relationship between sustainability integration and firm-level profitability, market valuation and capital costs in emerging European economies, using Bulgaria as a representative case study. The findings confirm that firms with higher ESG integration demonstrate stronger profitability, valuation, and lower capital costs.

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