The Relationship Between ESG Scores and Corporate Financial Performance: Evidence from DAX 40 Companies

Kofler, Thomas
(2026)

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KOFLER_98852400_2026.pdf
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Details

Supervisors
Paque, Bernard
Faculty
Louvain School of Management
Degree label
Master [120] en sciences de gestion, à finalité spécialisée
Abstract
As sustainability has become a defining criterion for both investors and regulators of large publicly listed companies in Germany, understanding its financial implications has never been more relevant. This study analyzes the relationship between ESG performance and financial performance, measured by Return on Assets and Stock Price Growth, for companies listed on the DAX 40 index over the period 2016–2024. Using Bloomberg ESG scores and financial data for 32 companies across 288 firm-year observations, the study applies descriptive statistics, correlation analysis, and multivariate OLS panel regressions. According to the results, no statistically significant relationship is found between composite ESG performance and financial outcomes in the full sample. However, a decomposed analysis of the three individual ESG pillars reveals significant effects across the Environmental, Social, and Governance dimensions, with governance showing the strongest positive correlation to financial performance. The findings contribute to the growing body of ESG literature by offering context-specific evidence from the German market and its highly regulated environment. The results have practical implications for investors, analysts, and policymakers seeking to promote sustainable corporate practices.