This chapter analyses the impact of ESG scores on firms’ profitability in the automotive sector between 2002 and 2016 for a novel dataset of European and North American listed firms. Results show that the environmental component of the ESG scores is positively associated with firms’ profitability. Among the components of overall ESG, the environmental score is the only one that exhibits the most robust association. Eventually when considering firm value proxied by means of Tobin’s Q, results show a negative association between the Tobin’s Q and the environmental component of ESG. Further estimations have highlighted a more nuanced evidence in particular with regard to profitability in terms of ROA.
Bellavite Pellegrini, C., Caruso, R., Cifone, R., Automotive and Tire Sector: Sustainability as the New “Value” for Shareholders, in Carlo Bellavite Pellegrin, C. B. P., Laura Pellegrin, L. P., Massimo Catizon, M. C. (ed.), Climate change adaptation, governance and new issues of value. Measuring the impact of ESG scores on CoE and Firm performance, Palgrave Macmillan, London 2022: <<PALGRAVE STUDIES IN IMPACT FINANCE>>, 155- 184. 10.1007/978-3-030-90115-8 [http://hdl.handle.net/10807/204480]
Automotive and Tire Sector: Sustainability as the New “Value” for Shareholders
Bellavite Pellegrini, Carlo
;Caruso, Raul
;
2022
Abstract
This chapter analyses the impact of ESG scores on firms’ profitability in the automotive sector between 2002 and 2016 for a novel dataset of European and North American listed firms. Results show that the environmental component of the ESG scores is positively associated with firms’ profitability. Among the components of overall ESG, the environmental score is the only one that exhibits the most robust association. Eventually when considering firm value proxied by means of Tobin’s Q, results show a negative association between the Tobin’s Q and the environmental component of ESG. Further estimations have highlighted a more nuanced evidence in particular with regard to profitability in terms of ROA.
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