Resumo

Responsible companies cannot ignore environmental issues, since environmental destruction and resource depletion make their sustainable development impossible (SONG; ZHAO; ZENG, 2017). In this sense, companies cannot shy away from the increasingly emerging social demands and must also seek to protect their shareholders (RAMIC, 2019). On the other hand, the adoption of corporate ESG practices requires the allocation of capital, and a widely spread view is that they are an overall cost without a clear benefit, since the returns are often not directly achieved through financial results

What is the relationship between ESG corporate practices and the financial performance of B3 companies that publish Sustainability Reports? This study measures ESG practices by building a literature-based proposed index in order to provide a broad view.

One of the initial studies regarding this issue focuses on the ESG Environmental pillar, conducted by Hart and Ahuja (1996), who empirically examined the financial economics of companies that reduced GHG emissions and found an improvement in ROE and ROA. However, the authors reported that it is increasingly difficult to improve financial performance over the long term, since the investments that enable emission reductions may exceed the generated savings, although there is an initial cost reduction for most companies along with the generation of economic benefits

The present study is characterized as descriptive and empirical. The population of the survey comprises all Brazilian publicly traded companies listed on B3, with information from 2010 to 2021. Some criteria were adopted for the selection of companies that make up the sample of this study: first, the disclosure of the Sustainability Report by the company was observed, in order to build the proxy for measuring corporate performance in ESG (environment, social, and governance). The second criterion is to verify if the company's current situation is active in 2021

According to tests, data regressions on unbalanced panel were analyzed o investigate the relationship between ESG corporate practices and the companies' financial performance. Financial performance, when measured by ROA, is impacted by ESG corporate performance. The environmental and governance dimensions showed a positive, significant relationship. An evolution in the disclosure of ESG activities over the analyzed period was observed. The main inferential results of this study indicate that ESG corporate practices have a positive influence on the financial performance of Brazilian companies

The contribution to studies that investigate the relationship between the financial performance of companies and their environmental, social, and corporate governance actions stands out by suggesting a positive relationship between the dimensions. Managers can be impacted and encouraged to guide the development of ESG practices, considering the alignment with financial interests and the increasingly latent demands for the preservation of society and the environment by investors, who also demand good governance practice standards. This study also provides an overview of an emerging market

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