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Driving credit access through ESG performance: A European perspective

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  • Campanella, Francesco
  • Meles, Antonio
  • Serino, Luana
  • Verdoliva, Vincenzo

Abstract

This paper analyzes whether there is any relationship between sustainability performance and corporate cost of debt. Using a sample of European listed companies, we find that high-ESG firms pay a lower cost on their debt, with the environmental dimension explaining most of this result and the governance dimension, instead, to have no effect in this respect. We also show that, consistent with the risk-reducing effect of superior ESG performance, a positive relation exists between ESG ratings and credit ratings. Our results are relevant to different groups of stakeholders, including policymakers, investors and firms themselves, suggesting them that they can benefit from being more socially responsible in terms of lower costs of financing.

Suggested Citation

  • Campanella, Francesco & Meles, Antonio & Serino, Luana & Verdoliva, Vincenzo, 2025. "Driving credit access through ESG performance: A European perspective," Finance Research Letters, Elsevier, vol. 82(C).
    • Handle: RePEc:eee:finlet:v:82:y:2025:i:c:s1544612325005598
    DOI: 10.1016/j.frl.2025.107296
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    Keywords

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    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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