Theoretical basis of the influence of esg factors on the value of companies

Babiy Oleg
PhD in Economics, Associate Professor of Enterprise Economics and Business Activity Organization Department, Odesa National Economic University, Odesa, Ukraine, E-mail:olegbabiy@ukr.net, ORCID ID: https://orcid.org/0000-0001-5199-228X

Kotets Karina
PhD Student of Enterprise Economics and Business Activity Organization Department, Odesa National Economic University, Odesa, Ukraine, E-mail: karina.kot@ukr.net, ORCID ID: https://orcid.org/0009-0000-0422-8887

Cite this article:

Babiy O., Kotets K., (2024) Theoretical basis of the influence of esg factors on the value of companies. Ed.: V.V. Kovalenko (ed.-in-ch.) and others [Teoretychni zasady vplyvu ESG-faktoriv na vartist kompanij; za red.: V.V. Kovalenko (gol. red.)], Scientific Bulletin of the Odesa National Economic University (ISSN 2313-4569), Odesa National Economics University, Odesa, No. 9 (322), pp. 63-70.

Abstract

To determine the impact of ESG factors (environmental, social and management) on the value of companies, to analyze their importance for making management decisions, attracting investments, building a business reputation and stability of companies in the market. Method. The research methodology includes several stages, namely: literature review, company data collection and quantitative analysis on the impact of ESG factors. The results of the study indicate that the introduction of ESG factors plays an important role in ensuring the sustainable development of companies. In particular, ESG helps companies better identify and manage potential risks related to the environment, social aspects and corporate governance. This allows you to minimize not only operational, but also reputational risks that may arise as a result of negative public opinion or non-compliance with international standards of responsibility. In addition, the implementation of ESG principles contributes to the improvement of the company's internal management processes, which leads to greater transparency, efficiency and long-term stability. Companies that actively implement ESG strategies usually gain the trust of investors, customers and partners, which contributes to their competitive growth in the market. High standards of ESG (environmental, social and corporate governance) are becoming an important success factor for modern business. Their implementation contributes to the attraction of long-term investments, as investors increasingly pay attention to the responsibility of companies in these areas. Companies that adhere to high ESG standards show that they are not only profit-oriented, but also responsible to society, the environment and their employees. This strengthens their reputation on the market and makes them attractive to partners and customers who increasingly choose to cooperate with responsible businesses. Moreover, companies that actively implement ESG principles become more resistant to reputational risks and scandals. In case of crisis situations, they are able to quickly restore the trust of consumers and partners thanks to the already established reputation of reliable and socially responsible enterprises. High ESG standards give such companies the opportunity to respond to the challenges of the modern business environment flexibly and effectively, which provides a competitive advantage over those who ignore these important aspects.

Keywords

ESG factors, ESG scandals, market value.

JEL classification:D210; D240; G140; DOI: https://doi.org/10.32680/2409-9260-2024-9-322-63-70

UD classification:658.114:332.6

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