Company Performance: Are Environmental, Social, and Governance Factors Important?

. Building on the resource-based view of entrepreneurship, we examine the association between environmental, social, and governance (ESG) factors and company performance, measured by return on assets, return on equity, and return on invested capital. We use regression models on a dataset of 60 observations of Russian companies including RAEX agency ESG ratings from 2018 to 2019. The results show that, in line with expectations, companies that comply with ESG principles demonstrate significantly better financial performance than other companies. This result holds true irrespective of the performance indicator used. Moreover, the governance factor is strongly related to company performance, providing implications for companies' policymakers in terms of the utility of adopting ESG information. The study provides insights into the resource-based view of entrepreneurship, demonstrating that ESG factors, and mainly the governance factor, create a competitive advantage for companies and allow superior performance.