The impact of sustainability performance on stock market performance

Purpose- The extent to which ESG Scores affect the financial and stock market performances of companies has been one of the prominent topics in research in recent years. The main purpose of this study is to determine to what extent ESG Scores affect the financial and stock market performances of companies, and whether the ESG Scores of companies with ESG Scores above 70 points and below 70 points have an effect on their stock market performances. The reason for the ESG Score limitation being 70 is that business reporting with a score of 70 is rated as excellent. The contribution of this study to the literature is to provide information to investors when making investment decisions. Methodology- In this study, the 2022 ESG Scores of the companies included in the BIST Sustainability Index and the stock market performances of the companies were examined. When comparing ESG Scores with stock market performance, Spearman correlation (rho) analysis, a non-parametric correlation test, was performed because the data was not normally distributed. While analyzing companies with ESG Scores above 70 and companies with ESG Scores of 70 and below, two independent group t-test comparisons were made. Since the data did not show normal distribution, the non-parametric Mann Whitney U test was used. Findings- In our research to examine the impact of ESG Scores on stock market performance, the 2022 ESG Scores of all businesses operating in Borsa Istanbul, whose data we used and entered the BIST Sustainability index between 2019-2022, were included in the analysis. The main sectors of the businesses included in the analysis are given in Table 6 and their sub-sectors are given in Table 7. Conclusion- The effects of the sustainability performance of businesses on their financial performance are issues that will take time. The number of companies included in the BIST Sustainability Index is increasing every year. With this increase, the importance of the concept of sustainability is better understood and spread. This research allowed for a large sample and comparisons between different sectors. Keywords: Sustainability, ESG Scores, Sustainability İndex. JEL Codes: M00, M20, M40