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2023 | OriginalPaper | Chapter

5. Corporate Financial Performance and ESG Performance: Which One Leads European Banks?

Authors : Mario La Torre, Sabrina Leo, Ida Claudia Panetta

Published in: Contemporary Issues in Sustainable Finance

Publisher: Springer International Publishing

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Abstract

This chapter goes beyond the relationship between a bank ESG performance (ESGP) and traditional financial measures, known in the literature as Corporate Financial Performance (CFP). Here, the link between ESG factors and financial benchmarks is analysed to verify whether banks may find sufficient stimuli (higher CFP) in the market reaction to adopt ESG conduct spontaneously. Starting from the results achieved in our previous pilot study (Torre et al., Corporate Social Responsibility and Environmental Management 28:1620–1634, 2021) on a limited number of European listed banks, we decided to deepen the relationship between ESGP and CFP to all available listed European banks between 2008 and 2020. Using panel estimation methods, we are going to further explore the relationship between ESGP and CFP, considering different dimensions of financial performance at once, both accounted-based (ROA and ROE) and market-based (Capitalisation to Book Value, Tobin's Q). Furthermore, we employ VBM, namely EVA Spread, less explored in literature. Unlike our previous pilot study, we use the single Pillar Scores (Environmental, Social and Governance) as ESGP instead of the ESG Score.

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previous chapter ESG Ratings, Scores, and Opinions: The State of the Art in Literature
next chapter Is Performance the Key Issue in SRI Funds? Conclusion and Lessons Learned from Three Decades of Studies
Appendix
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Footnotes
1
As of May 2021.
 
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Metadata
Title
Corporate Financial Performance and ESG Performance: Which One Leads European Banks?
Authors
Mario La Torre
Sabrina Leo
Ida Claudia Panetta
Copyright Year
2023
Book
Contemporary Issues in Sustainable Finance

Print ISBN: 978-3-031-22538-3

Electronic ISBN: 978-3-031-22539-0

Copyright Year: 2023

DOI
https://doi.org/10.1007/978-3-031-22539-0_5

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