Impact of Environmental, Social, and Governance (ESG) performance on the financial and market behavior of publicly listed shipping companies

Abstract

This thesis examines how Environmental, Social, and Governance (ESG) performance influences the valuation, profitability, leverage, and market perception of publicly listed shipping companies. As regulatory pressure, investor scrutiny, and sustainability expectations intensify, ESG considerations are increasingly relevant for capital-intensive and environmentally sensitive industries such as shipping. However, unlike sectors such as technology or finance, shipping is characterized by high asset intensity, long asset lifecycles, regulatory exposure, and pronounced cyclicality, suggesting that ESG may affect firm value in distinct ways. To address a gap in the existing literature, the study investigates whether ESG performance functions as a value-enhancing signal or a cost burden for U.S.-listed shipping firms. Using a balanced panel of 22 shipping companies listed on the NYSE and NASDAQ between 2004 and 2024, the research applies fixed- and random-effects panel regression models. Firm valuation is analyzed across three established approaches: income-based (ROE, ROA, Net Profit Margin), asset-based (Net Asset Value per share, Debt-to-Assets ratio), and market-based (market capitalization, Price-to-Book, Price-to-Earnings ratios). ESG performance is examined both as an aggregate score and across its individual Environmental, Social, and Governance dimensions. The empirical findings indicate that ESG performance has a differentiated and nuanced impact on firm value.The study contributes to both academic and practical discourse by demonstrating that ESG impacts are valuation-method specific and pillar-dependent. It provides actionable insights for investors, managers, and policymakers while advancing understanding of sustainable value creation in the maritime industry.This thesis examines how Environmental, Social, and Governance (ESG) performance influences the valuation, profitability, leverage, and market perception of publicly listed shipping companies. As regulatory pressure, investor scrutiny, and sustainability expectations intensify, ESG considerations are increasingly relevant for capital-intensive and environmentally sensitive industries such as shipping. However, unlike sectors such as technology or finance, shipping is characterized by high asset intensity, long asset lifecycles, regulatory exposure, and pronounced cyclicality, suggesting that ESG may affect firm value in distinct ways. To address a gap in the existing literature, the study investigates whether ESG performance functions as a value-enhancing signal or a cost burden for U.S.-listed shipping firms. Using a balanced panel of 22 shipping companies listed on the NYSE and NASDAQ between 2004 and 2024, the research applies fixed- and random-effects panel regression models. Firm valuation is analyzed across three established approaches: income-based (ROE, ROA, Net Profit Margin), asset-based (Net Asset Value per share, Debt-to-Assets ratio), and market-based (market capitalization, Price-to-Book, Price-to-Earnings ratios). ESG performance is examined both as an aggregate score and across its individual Environmental, Social, and Governance dimensions. The empirical findings indicate that ESG performance has a differentiated and nuanced impact on firm value. The study contributes to both academic and practical discourse by demonstrating that ESG impacts are valuation-method specific and pillar-dependent. It provides actionable insights for investors, managers, and policymakers while advancing understanding of sustainable value creation in the maritime industry.