IDEAS home Printed from https://ideas.repec.org/a/gam/jijfss/v13y2025i4p230-d1809271.html

ESG Ratings and Financial Performance: An Empirical Analysis

Author

Listed:
  • Guido Abate

    (Department of Economics and Management, University of Brescia, C.da S. Chiara, 50, 25122 Brescia, Italy)

  • Ignazio Basile

    (Department of Economics and Management, University of Brescia, C.da S. Chiara, 50, 25122 Brescia, Italy)

  • Pierpaolo Ferrari

    (Department of Economics and Management, University of Brescia, C.da S. Chiara, 50, 25122 Brescia, Italy
    SDA Bocconi School of Management, Via Sarfatti, 10, 20136 Milan, Italy)

Abstract

In light of the growing interest in sustainable finance among investors and academics, in this study, we present an empirical analysis designed to understand whether sustainable investments outperform, underperform, or perform neutrally relative to conventional investments. The literature presents a spectrum of often-opposed conclusions, precluding the establishment of a definitive, consensus-driven judgment. Therefore, our analysis examines the behavior of sustainable investments within the Eurozone equity market from January 2019 to December 2023. Twenty portfolios are constructed to simulate sustainable investment strategies differentiated by environmental, social, and governance (ESG) strategy; stock inclusion/exclusion thresholds; and the type of ESG rating employed in the selection process. The analysis reveals that sustainable investments do not statistically significantly outperform or underperform traditional investments. This finding is significant for investors committed to ESG principles, as it suggests that they can align their investment choices with their ethical convictions without sacrificing performance.

Suggested Citation

  • Guido Abate & Ignazio Basile & Pierpaolo Ferrari, 2025. "ESG Ratings and Financial Performance: An Empirical Analysis," IJFS, MDPI, vol. 13(4), pages 1-20, December.
    • Handle: RePEc:gam:jijfss:v:13:y:2025:i:4:p:230-:d:1809271
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2227-7072/13/4/230/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2227-7072/13/4/230/
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jijfss:v:13:y:2025:i:4:p:230-:d:1809271. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.