September 25, 2025SustainabilityOpen Access

Integrating Environmental, Social, and Governance (ESG) Factors into the Investment Returns of American Companies

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Analysis shows a strong relationship between ESG performance and Tobin's Q in S&P 500 firms, suggesting potential for long-term value.

Results indicate a modest association with Return on Assets, but stronger with Tobin’s Q, signifying market value enhancement.
The study evaluated 386 firms over 10 years, revealing ESG practices may incur initial costs impacting ROA short-term.
Panel data regression models were employed to analyze ESG scores' effects on financial indicators in a balanced dataset.
Highlights the significance of ESG integration for corporate leaders, suggesting it as a long-term value driver and risk mitigator.

Lunawat et al. (2025) studied this question.

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