ASSESSING THE IMPACT OF ESG ON FINANCIAL PERFORMANCE: AN EMPIRICAL CROSS-SECTORAL STUDY OF SUSTAINABLE COMPANIES IN ROMANIA USING REGRESSION MODELS

This study investigates the relationship between ESG (Environmental, Social, and Governance) performance and financial outcomes in Romania's most sustainable companies, based on CST Index scores. Using a sample of 20 firms from diverse sectors and testing thousands of regression regression models, the research applies rigorous statistical criteria (R² > 0.80, p-value < 0.05, Durbin–Watson diagnostics) to identify valid links between ESG indicators—such as GHG emissions, energy consumption, and community investment—and financial metrics including ROIC, EBIT, and net profit. The results show that ESG can meaningfully affect financial performance when actions are aligned with industry-specific material issues; the effect is not universal and varies across sectors and firms. The study adds evidence from an emerging EU market-Romania, offering actionable insights for managers (prioritizing financially material ESG initiatives), investors (assessing ESG through a sector-aware lens), and policymakers (enhancing disclosure quality and comparability).