The study examines the link between the Environmental, Social and Governance (ESG) performance of a company and its cost of debt, measured as credit spreads between corresponding corporate and risk-free government bonds, in Nordic countries between 2020 and 2022. No previous studies look at ESG effects on bond spreads in the Nordic markets, although their stakeholder-oriented nature could make them attentive to ESG issues. Additionally, public and regulatory attention to carbon dioxide suggest a value for companies in decreasing emissions. In line with previous studies on ESG top-level and individual pillar performance, Refinitiv ESG scores are used as proxies for ESG performance in the two initial regressions, and an additional regression is run where a measure of carbon intensity is substituted for environmental pillar performance. Although there is a risk of reverse causality inherent in this field, the findings in this study indicate that ESG top-level performance reduces cost of debt, while carbon intensity increases it. Notably, social pillar scores and carbon intensity, but not environmental pillar scores, have significant effects on spreads.

The use of sustainability within the investment community is becoming increasingly common. More specifically, investors are now more than ever leaning towards ESG scores as a way of incorporating a more holistic approach when making investment decisions. However, the evidence for a relationship between financial performance and ESG scores is inconsistent. Besides, a recent study has also shown a large divergence between ESG scores. Together this urges a need for a more in-depth understanding of which, if any, non-financial metrics have an impact on financial performance. Therefore, this study investigated if there is any relationship between ESG metrics and financial performance for Nordic public companies by performing a multiple linear regression analysis. Our results concluded that such a relationship exists, both for accounting-based ROA and market-based Tobin’s Q between 2017-2018. This study also shows that there is an overall concentration towards social metrics for both models. Secondly, it shows that some metrics such as “Percentage of Female Employees” are positively significant for ROA but not valued by the market model. The opposite outcome also exists where “Code of Conduct/Ethics Policy” is positively significant for Tobin’s Q but not for ROA. Lastly, it is also shown that some important metrics are negative significant for ROA and therefore urging for inclusion of non-financial measurements when making strategic decisions. / Användandet av hållbarhet inom investeringssfären blir allt vanligare. Investerare förlitar sig allt mer på ESG-betyg som ett sätt att integrera en helhetssyn när de fattar investeringsbeslut. Bevisen för ett samband mellan finansiell prestation och ESG-betyg är dock inkonsekventa. Dessutom har en ny studie också påvisat stora skillnader mellan ESG-betyg. Tillsammans skapar detta ett behov av mer fördjupad förståelse för vilka, om ens några, icke finansiella mått som har en inverkan på den finansiella prestationen. Därför undersökte denna studie om det finns något samband mellan ESG-mått och finansiell prestation för nordiska börsnoterade företag genom att utföra en multipel linjär regressionsanalys. Resultaten konkluderade att en sådan relation existerar, både för det bokföringsbaserade måttet ROA och marknadsbaserade måttet Tobin’s Q mellan 2017-2018. Studien visar också att det finns en övergripande koncentration mot sociala mått för båda modellerna. Efter det visas det även att mått som exempelvis “Percentage of Female Employees” är positivt signifikanta för ROA men inte signifikanta alls för Tobin’s Q. Ett liknande men motsatt resultat finns också då måttet “Code of Conduct/Ethics Policy” är positivt signifikant för Tobin’s Q men inte för ROA. Slutligen visar också denna studie på att det finns viktiga mått som visar en negativ signifikans med ROA och att det därför är viktigt att även inkludera icke-finansiella mått när strategiska beslut ska fattas.