ESG Score and Firm Performance: A Comparative Analysis of Nordic and European Companies

This study explores the relationship between ESG disclosure and firm performance using a panel dataset of approximately 24,500 firm-year observations between 2015 and 2024, based on Refinitiv ESG scores across 12 industries and multiple European countries. To capture regional heterogeneity, the analysis splits the sample into Nordic and non-Nordic firms, applying fixed-effects panel regression for the latter and random-effects models for the former, supported by Hausman test results. The results reveal that ESG disclosure correlates positively with firm performance, though effects differ across finan-cial metrics and regional contexts. In the Nordic sample, a 10-point increase in ESG score is associated with a 4.2 basis point reduction in WACC, suggesting that ESG maturity enables firms to access cheaper financing. In contrast, for non-Nordic firms, short-run profitability appears more sensitive to ESG engagement, especially through the environ-mental pillar. Importantly, the governance (G) component plays a critical role in reducing financing costs outside the Nordics. These findings highlight how institutional maturity and disclosure quality shape ESG’s financial impact. The study recommends that firms and regulators in less mature ESG environments strengthen governance transparency to realize capital cost advantages. The analysis reveals that while ESG scores are associated with lower WACC in both Nordic and non-Nordic firms, their effect on short-run profitability (ROA/ROE) is nega-tive and statistically significant only in the non-Nordic subsample. These region-specific differences support the role of institutional maturity and investor orientation in shaping ESG outcomes.