The Impact of ESG Performance on Firm Value: Evidence from European Firms and the Introduction of the CSRD

Sammanfattning

This thesis examines the impact of ESG performance on firm value and how the adoption of the Corporate Sustainability Reporting Directive (CSRD) has influenced the relationship for 623 publicly listed firms within EU/EEA member states during the period 2016-2025. Using a quantitative panel data approach with a quasi-experimental design, this study uses a Two-Way Fixed Effects regression and a Difference-in-Difference regression to analyze the relationship before and after the adoption of the CSRD. The findings indicate a positive association between ESG performance and firm value, with a more pronounced positive association following the adoption of the CSRD. These results suggest that investments in ESG initiatives and reporting in accordance with the CSRD can contribute to strategic value-creation for firms. The analysis also provides evidence of a potential non-linear relationship, which suggests that the value-enhancing effects of ESG performance may vary across different levels of ESG engagement. This study contributes to the existing literature by offering an updated analysis of the ESG performance-firm value relationship and providing insights into how this relationship has evolved following the adoption of the CSRD using recent post-adoption data. The findings have important implications for firms, investors, and policymakers, by highlighting the potential of ESG investments and sustainability reporting regulations to increase capital market efficiency and support further sustainability improvements in the broader economy and society.