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ESG integration and cost of capital: Microsoft's sustainable finance transformation

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  • Pamela Tinashe Bakare

    (Hubei University of Technology, China)

Abstract

Purpose: This study examines the relationship between Environmental, Social, and Governance (ESG) integration and the cost of capital for Microsoft Corporation from 2015 to 2025, analyzing how comprehensive sustainability initiatives influence borrowing costs, credit ratings, and investor valuations. Methodology: Employing a mixed-methods longitudinal case study design, this research combines quantitative analysis of financial metrics (bond yields, credit spreads, cost of debt) with qualitative thematic analysis of ESG initiatives. Secondary data sources include Microsoft's annual reports (2015-2025), sustainability disclosures, credit rating reports, and market data from Bloomberg and Refinitiv databases. Findings: Microsoft's ESG integration strategy correlates strongly with favorable cost of capital outcomes, including maintenance of AAA credit ratings across all major agencies, bond yields approaching Treasury rates (spread compression to 8 basis points), and statistically significant negative correlations (r = -0.82, p

Suggested Citation

  • Pamela Tinashe Bakare, 2025. "ESG integration and cost of capital: Microsoft's sustainable finance transformation," Journal of Accounting, Finance, Economics, and Social Sciences, CamEd Business School, vol. 10(2), pages 33-46, December.
    • Handle: RePEc:euj:jafess:v:10:y:2025:i:2:id:119
    DOI: 10.62458/jafess1023bpt
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