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More Money, More Ethical Commitment? How Corporate Financial Performance Influences Environmental Social and Governance Practices

Author

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  • Ertz Myriam

    (Canada Research Chair in Technology, Sustainability, Society (Chaire TDS), Department of Economics and Administrative Sciences, Université du Québec à Chicoutimi, Chicoutimi, QC G7H 2B1, Canada)

  • Gautier George Yao Quenum

    (Canada Research Chair in Technology, Sustainability, Society (Chaire TDS), Department of Economics and Administrative Sciences, Université du Québec à Chicoutimi, Chicoutimi, QC G7H 2B1, Canada)

  • Mouhamadou Moustapha Gueye

    (Canada Research Chair in Technology, Sustainability, Society (Chaire TDS), Department of Economics and Administrative Sciences, Université du Québec à Chicoutimi, Chicoutimi, QC G7H 2B1, Canada)

  • Chourouk Ouerghemmi

    (Canada Research Chair in Technology, Sustainability, Society (Chaire TDS), Department of Economics and Administrative Sciences, Université du Québec à Chicoutimi, Chicoutimi, QC G7H 2B1, Canada)

  • Moussa Sacko

    (Canada Research Chair in Technology, Sustainability, Society (Chaire TDS), Department of Economics and Administrative Sciences, Université du Québec à Chicoutimi, Chicoutimi, QC G7H 2B1, Canada)

Abstract

This article explores the relationship between corporate financial performance (CFP) and commitment to ESG (environmental, social and governance) practices, using a sample of companies listed on the S&P 500 and TSX 60 indices. By employing a linear regression model, the study examines how financial indicators such as Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), return on assets (ROA), Assets and Debt influence ESG scores. The results show that financial indicators such as EBITDA, ROA and Assets are positively associated with increased ability to commit resources to ESG practices, except in some cases like when costs associated with ESG initiatives can reduce the competitiveness and profitability of companies in the short term, where ROA is negatively correlated with the adoption of ESG criteria. Also, with regard to the size of companies, thanks to their greater resources, larger companies are more inclined to adopt ESG criteria. These findings enhance the understanding of financial conditions that enable or constrain ESG adoption and provide managerial insights for strategic resource allocation in the pursuit of sustainability goals.

Suggested Citation

  • Ertz Myriam & Gautier George Yao Quenum & Mouhamadou Moustapha Gueye & Chourouk Ouerghemmi & Moussa Sacko, 2025. "More Money, More Ethical Commitment? How Corporate Financial Performance Influences Environmental Social and Governance Practices," IJFS, MDPI, vol. 13(3), pages 1-20, August.
    • Handle: RePEc:gam:jijfss:v:13:y:2025:i:3:p:159-:d:1738172
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    References listed on IDEAS

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