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The impact of corporate sustainability performance on capital structure: A literature review

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  • Kotryna Garmute

    (Vilnius University)

Abstract

The aim of this article is to analyse the impact of corporate sustainability performance on capital structure, based on a review of recent literature and empirical studies. The article discusses how environmental, social and governance (ESG) factors influence corporate financial decisions, particularly the debt-to-equity ratio. Research shows that higher levels of ESG disclosure often led to lower cost of capital, lower financial leverage and greater investor confidence. ESG performance is becoming an indicator not only of reputation but also of financial efficiency, as transparency and responsible performance reduce risk and improve access to finance. The article highlights that the impact of sustainability factors on capital structure depends on the sector, region and size of the company, therefore it is important to assess these aspects in a contextual way. The article concludes that sustainable performance and ESG integration are becoming a cornerstone in shaping a modern, resilient and competitive capital structure.

Suggested Citation

  • Kotryna Garmute, 2026. "The impact of corporate sustainability performance on capital structure: A literature review," Transformations and Sustainability, Centre for Productivity and Sustainability Analysis, vol. 2(3), pages 180-191.
    • Handle: RePEc:dbj:trasus:v:2:y:2026:i:3:p:180-191
    DOI: 10.63775/70n0e609
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