EURO 2025 Leeds
Abstract Submission

302. Do ESG Factors Influence the Financial Performance of Financial Institutions? The Case of London as a Global Financial Center

Invited abstract in session WD-7: Sustainable investments and financial performance , stream Risk Management in Commodities and Financial Markets .

Wednesday, 14:30-16:00
Room: Clarendon GR.01

Authors (first author is the speaker)

1. Raminta Vaitiekuniene
School of Economics and Business, Kaunas University of Technology

Abstract

Sustainability goals can be a strategic opportunity to increase financial performance based on Return on Equity (ROE), Return on Assets (ROA) and Net Income to Common Margin (NIM) in the financial sector, including banks, fintech companies, investment funds and insurance companies. The study aims to assess how Environmental, Social and Governance (ESG) scores affect the financial performance of financial institutions included in the FTSE 100 stock index (FSI) for the period 2002–2023, using the Ordinary Least Squares (OLS) method taking into account endogeneity in the panel data. FSI represents financial institutions listed on the London Stock Exchange (LSE). The LSE is one of the world's most important financial centers, exerting a significant influence on the strategic direction of financial institutions in other countries. The study findings demonstrate that the overall ESG score and individual sustainability components significantly influence the financial performance of the LSE FSI financial sector. The overall ESG score, environmental and governance sustainability pillars positively and significantly impact ROE. The overall ESG score and governance sustainability component have a positive and important impact on ROA changes. The governance sustainability score has a positive and meaningful effect on NIM. Despite the tightening of sustainability requirements, average environmental and social sustainability scores remain low in the LSE FSI financial sector.

Keywords

Status: accepted

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