Evaluating the Impacts of Sustainability Reporting on Financial Performance of Corporations

With the increasing emphasis on corporate sustainability and general global sustainability issues, more companies and firms began to prioritize their business sustainability measures, such as requiring third-party organizations risk assessment and keeping an outstanding ESG score. While some studies have shown that this positively impacts companies financial performance, various results still highlight disagreement. It is still unclear for firms the optimal cost-effective ratio of maintaining a high ESG score. Moreover, sometimes the subjunctive weights of specific indices included in calculation of ESG score by these organizations add uncertainties. This paper focuses on the environmental aspect of the ESG score collected from top ten US companies sustainability reports, analyzed their weights in ESG calculation and mapped significant relationships between environmental indices, social responsibility indices, governance indices, financial performance indices and ESG score through regression analysis. This would provide insights for business decisions to balance sustainability investment to improve firm profitability, as well as the development of ESG evaluation systems.