The effects of corporate sustainability performance on cost of debt: The case of Borsa Istanbul

The aim of this study is to examine the impact of corporate sustainability performance on the cost of debt for non-financial companies listed in the Borsa Istanbul 100 index. Using data from the years 2014 to 2022, analyses were conducted through the panel data analysis method. The sample consists of 58 companies and 316 observations. Environmental, social, and governance (ESG) scores of the companies were obtained from the Refinitiv Eikon database, and these scores were used as indicators of sustainability performance. The analysis results showed that environmental, social, and governance performance did not have a statistically significant effect on the cost of debt for companies. During the period studied, a crisis caused by COVID-19 occurred, and it was observed that the cost of debt increased for companies during this time. The analysis results indicated that during the COVID-19 period, social performance and governance performance had a statistically significant, negative, and cost-reducing effect on the cost of debt. Additionally, it was found that large companies and those with a high ratio of fixed assets had lower borrowing costs, while companies in the service sector had higher borrowing costs. The findings of the study suggest that lenders place importance on ESG practices when assessing the creditworthiness of companies during crisis. This situation indicates a need for regulatory and supervisory authorities to promote policies that further support or mandate companies' ESG commitments. Keywords: Corporate Sustainability Performance, Cost of Debt, Borsa Istanbul, COVID-19.