The Influence of ESG Factors on Corporate Financing Costs in Emerging Markets

Emerging-market firms often face elevated financing costs due to macroeconomic volatility, institutional weaknesses, and environmental risks. Yet most existing studies focus on developed economies, leaving limited evidence on how environmental, social, and governance (ESG) factors affect debt pricing in emerging contexts. This study addresses this gap by adopting a mixed-methods design, combining panel regression analysis of firm-level ESG ratings, financial indicators, and macroeconomic data from 2023 to 2025 with comparative case studies of firms implementing substantial ESG reforms. The econometric results show that superior ESG performance is significantly associated with lower financing costs, with governance and environmental pillars exerting the strongest influence, while social factors have weaker and statistically insignificant effects. Case evidence further illustrates how governance reforms and environmental commitments lead to favorable refinancing terms, whereas social initiatives yield mainly reputational benefits. These findings extend ESG-financing research to emerging markets and provide practical insights for managers, investors, and policymakers seeking to lower capital costs and strengthen sustainable finance.