Graduation Year


Date of Submission


Document Type

Campus Only Senior Thesis

Degree Name

Bachelor of Arts



Reader 1

Nishant Dass

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As more and more investors incorporate Environmental, Social and Governance (ESG) criteria into their investment decisions, the more prudent it becomes to learn what the financial implications of increasing investment into ESG criteria are. Previous studies show that ESG scores have a positive effect on financial performance, but they also show that ESG has a neutral or negative effect on financial performance, therefore the answer remains unclear. Using a sample of 340 firms across the U.S. and Europe, between FY0 to FY-4, this paper investigates the relationship between corporate social responsibility, measured by independent variable ESG, and corporate financial performance, measured by return on assets (ROA) and returns on investments (ROE). The results obtained show one instance of a statistically significant relationship of ESG on ROE, however the rest of the regression run show no statistical significance between the ESG coefficient and ROA or ROE meaning that the effect of ESG on ROA and ROE is not robust. Possible limitations of the study include the high variation of ESG scoring across ESG rating industries, the time frame chosen, and the number of observations analyzed.

This thesis is restricted to the Claremont Colleges current faculty, students, and staff.