Sustainable prosperity: unravelling the Nordic nexus of ESG, financial performance, and corporate governance

• Published in: European Business Review
• Main Authors: Saha, Anup Kumar, Khan, Imran
• Format: Article in Journal/Newspaper
• Language: English
• Published: Emerald 2024
• Subjects: Norway; Iceland
• Online Access: http://dx.doi.org/10.1108/ebr-09-2023-0276; https://www.emerald.com/insight/content/doi/10.1108/EBR-09-2023-0276/full/xml; https://www.emerald.com/insight/content/doi/10.1108/EBR-09-2023-0276/full/html

Purpose In the swiftly evolving business landscape, environmental, social and governance (ESG) considerations have gained exceptional prominence, as stakeholders increasingly emphasize accountability and sustainability. This study aims to meticulously probe the intricate interplay between ESG factors, financial performance and the distinct corporate governance landscape that characterizes the Nordic region's crucible of proactive societal and environmental commitment. Design/methodology/approach The authors begin with a data set of 899 Nordic firms across Sweden, Norway, Denmark, Finland and Iceland. Using the Thomson Reuters database, they refine this data set by excluding non-regional headquarters and entities without ESG scores or year-long financial data. This resulted in a focused data set of 1,360 firm-years spanning a decade, forming the foundation for investigating the link between ESG factors and financial performance in Nordic firms. Findings Drawing upon empirical data, the authors systematically dissect the correlation between specified financial ratios and ESG scores on the bedrock of sustainability evaluation. The findings underscore a partially significant, yet robust relationship between ESG endeavors and financial performance metrics. Furthermore, the intricate interplay of corporate governance dimensions’ reveals intriguing correlations with financial indicators among the surveyed Nordic enterprises. However, the findings also reveal an intricate weave that underscores the ESG and financial performance nexus. Research limitations/implications This study addresses stakeholders’ theory and unique positions and contributes to the current discussion on sustainability reporting literature by providing empirical evidence of ESG influences on firm profitability through board characteristics in the specific context of the Nordic region. The sample for this study encompasses firms listed in Nordic countries; thus, the results may not be generalizable to unlisted firms and other countries or regions. ...