The impact of ESG factors on corporate financial performance: Strategies, integration and green M&As

This thesis examines how Environmental, Social, and Governance (ESG) factors shape corporate financial performance and decision-making. As sustainability gains importance in financial markets and company policies, this research synthesizes insights from industry reports, case studies, and academic literature to evaluate ESG's financial implications. The study concentrates on five key areas: implementation of ESG in corporate governance; financial impacts on profitability and risk management; evolving investor expectations; sector-specific variations in ESG adoption; and cases of successful corporate transformations. Collectively, these areas highlight ESG's crucial role in shaping financial and strategic outcomes, as well as its connection to green mergers and acquisitions (M&As). Integrating ESG factors into core strategies and fostering a culture supportive of sustainability can lead to enhanced outcomes. Ørsted exemplifies successful ESG integration, while Shell illustrates challenges in balancing traditional operations with sustainable practices. Green M&As can further ESG adoption, but success largely depends on integrating organizational goals and cultures. This research contributes to the sustainable finance literature by providing insights into the influences of ESG factors on financial performance, offering guidance to managers, investors, and policymakers on how to balance environmental accountability with value creation. The study emphasizes ESG-linked pathways for growth and supports evidence-based decisions in corporate finance and sustainability.