ESG performance and financial performance for US listed shipping firms

Abstract

This study examines the relationship between Environmental, Social, and Governance (ESG) performance and the financial outcomes of 32 U.S.-listed shipping firms from 2002 to 2023. ESG scores were obtained from LSEG Data & Analytics (formerly Refinitiv Eikon), while financial data was sourced from Bloomberg. The study utilizes panel data regressions to explore the impact of ESG pillars and sub-pillars performance on financial metrics, specifically Return on Assets (ROA). The results reveal no significant correlation between ESG, its pillars, or sub-pillars,and financial performance, suggesting that ESG performance does not immediately impact financial outcomes in this sector. Across all models, control variables such as leverage, and asset turnover were significant. To analyze the delayed effects, both independent and control variables were included in the lagged form. The outcome of the lagged ESG score shows positive association with ROA at a 5% level of significance. Overall, this research offers valuable insights for shipping companies and industry stakeholders, understanding the potential of ESG investments and sustainable practices to enhance financial performance and secure long-term financial health.