Graduation Year


Date of Submission


Document Type

Campus Only Senior Thesis

Degree Name

Bachelor of Arts



Reader 1

Andrew Finley


As environmental, social, and governance (ESG) factors gain prominence in the business landscape, understanding the financial implications of ESG integration has become increasingly important. This research paper investigates the potential link between ESG scores and the cost of raising debt, a critical component of a company's cost of capital. By examining the relationship between ESG scores and the cost of debt, this study aims to provide valuable insights for investors and companies seeking to optimize their financing decisions and contribute to the broader discourse on the role of ESG in shaping the financial landscape. Using a sample of fixed-rate senior unsecured bond issuances from 2010 to 2022 across various industries, this paper employs multivariable regression analysis to explore the relationship between ESG scores and the cost of debt while controlling for factors such as yearly inflation, industry, credit rating, company size, and other company-specific financial metrics. The analysis reveals a negative but statistically insignificant relationship between ESG score and yield spread, indicating that a higher ESG score does not necessarily lead to a lower cost of debt.

This study offers a new perspective on the relationship between ESG performance and debt cost for bond issuers and investors, highlighting the need for further research to better understand the complex interplay between ESG factors and financing decisions.

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