The Relationship Between ESG Rating and Firm Value—Evidence from Companies Listed on Polish Capital Market in the WIG-ESG Index

The literature are abound with studies on the impact of environmental, social, and governance (ESG) factors on a company‘s value, or more broadly, on its financial performance. However, most analyses concern developed markets, mainly because the largest rating agencies operate in these markets, as well as because these are markets where ESG awareness and regulations have developed much faster. In developing markets, the number of studies in this area is disproportionately smaller. Therefore, the purpose of this article is to examine the relationship between the environmental, social, and governance ratings (ESGR) of Polish listed companies included in the WIG-ESG index and their value. This study covered 36 companies listed in WIG-ESG in the period of 2019–2023. We used market data, financial data from examined companies and ESG data provided by Refinitive. The empirical results were negative but a non-statistically significant influence of ESGR and a company’s value. Further analysis indicated that none of the sub-ratings (environmental rating (ER), social rating (SR) and governance rating (GR)) had significant impact on value. The Polish market does not seem to recognize the potential of ESG factors in building the long-term value of companies and believes that the costs of ESG factors outweigh the benefits. Investors seem to disregard or underestimate ESG criteria when valuing companies, which may seem irrational when looking at the long-term effects of ESG factors.