Abstract:

Building on the resource-based view, we examine the association between environmental, social, and governance factors and firm performance, measured by return on assets, return on equity, and return on invested capital. Regression models are used on a dataset of 60 observations of Russian firms, taken in ESG-rating of RAEX agency from 2018 to 2019. The results show that in line with expectations the performance of firms, that comply with ESG principles is significantly higher compared to other firms. This result holds irrespective to the used performance indicator. Moreover, the governance factor is strongly related to firm performance, providing implications for companies’ policymakers in terms of the utility of adopting ESG information. The study provides insights on the resource-based view, demonstrating that the factors of ESG, mainly governance factor, create a stronger competitive advantage and give the opportunity to achieve superior performance for the companies.