Sustainability Index and Corporate Performance: A Study of the FTSE4Good IBEX

Abstract

In response to the evolution of global paradigms, contemporary companies have moved beyond the exclusive pursuit of traditional financial metrics, embracing environmental, social, and governance (ESG) considerations as fundamental components of their strategic agendas. This study delves into ESG’s influence on financial performance among Spanish companies listed on the FTSE4Good IBEX versus the IBEX 35 from 2015 to 2022. Surprisingly, sustainability index inclusion doesn’t guarantee superior financial outcomes; IBEX 35 firms showcase stronger liquidity, solvency, return on assets, and investment compared to FTSE4Good IBEX counterparts. Return on equity and financial leverage, however, display no significant divergence between the groups, adding intricacy to the ESG-finance correlation. The findings emphasize addressing financial hurdles for ESG-centric entities and challenge the FTSE4Good IBEX’s comprehensive reflection of ESG practices. Continuous exploration of factors shaping the relationship between ESG and financial results remains imperative for comprehensive insights.