Driving credit access through ESG performance: A European perspective

Francesco Campanella, Antonio Meles, Luana Serino and Vincenzo Verdoliva

Finance Research Letters, 2025, vol. 82, issue C

Abstract: This paper analyzes whether there is any relationship between sustainability performance and corporate cost of debt. Using a sample of European listed companies, we find that high-ESG firms pay a lower cost on their debt, with the environmental dimension explaining most of this result and the governance dimension, instead, to have no effect in this respect. We also show that, consistent with the risk-reducing effect of superior ESG performance, a positive relation exists between ESG ratings and credit ratings. Our results are relevant to different groups of stakeholders, including policymakers, investors and firms themselves, suggesting them that they can benefit from being more socially responsible in terms of lower costs of financing.

Keywords: Corporate governance; Cost of debt; ESG performance; Sustainability (search for similar items in EconPapers)
JEL-codes: G32 M14 Q56 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:82:y:2025:i:c:s1544612325005598

DOI: 10.1016/j.frl.2025.107296

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