IDEAS home Printed from
   My bibliography  Save this article

ESG-Based Sustainability Performance and its Impact on Cost of Capital: International Evidence from the Energy Sector


  • Ilker Yilmaz


The purpose of this article is to examine the impact of firms’ sustainability performance, measured through their ESG (environmental, social, and governance) scores, on their cost of capital. Using the data of 125 companies from 24 countries for an eleven-year period from 2009 to 2019, we run panel data regressions to find out the impact of ESG scores on two measures of cost of capital: cost of debt, and cost of equity. We run pooled and panel regressions. The results reveal an inverse relationship between cost of capital and overall ESG scores. As a robustness check, we run the analyses according to the generalized method of moments, leading to similar results. For the individual scores of the environmental, social, and governance pillars, the results are mixed. The results imply that companies should adopt a holistic approach and engage in all dimensions of sustainability.

Suggested Citation

  • Ilker Yilmaz, 2022. "ESG-Based Sustainability Performance and its Impact on Cost of Capital: International Evidence from the Energy Sector," International Journal of Applied Economics, Finance and Accounting, Online Academic Press, vol. 12(2), pages 21-30.
  • Handle: RePEc:oap:ijaefa:v:12:y:2022:i:2:p:21-30:id:529

    Download full text from publisher

    File URL:
    Download Restriction: no

    File URL:
    Download Restriction: no


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Shengyang Qin & Xinxing Duan & Ahmad Fatehallah Al-hourani & Naif Alsaadi, 2022. "Evaluation of Total Quality Management in Turkish Pharmaceutical Companies: A Case Study," Sustainability, MDPI, vol. 14(16), pages 1-20, August.


    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:oap:ijaefa:v:12:y:2022:i:2:p:21-30:id:529. 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: Heather Rothman (email available below). General contact details of provider: .

    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.