The influence of ESG performance on the ability to raise capital for large and very large publicly listed companies in Belgium

Abstract

This thesis investigates the influence of Environmental, Social, and Governance (ESG) performance on the ability of large and very large publicly listed companies in Belgium to raise capital. As ESG criteria increasingly shape investment decisions, this research aims to determine whether higher ESG scores enhance a company’s attractiveness to investors and improve its capital-raising capabilities. The study employs a quantitative methodology, utilizing multiple linear regression analysis on data from 39 large and very large publicly listed Belgian companies over a five-year period from 2018 to 2022, resulting in 195 firm-year observations. The regression model explores the relationship between ESG scores and the equity-to-total-assets ratio, while controlling for factors such as company size, profitability, long-term debt level, and stock performance.

The findings reveal that ESG performance does not have a statistically significant impact on the ability to raise capital for these large Belgian enterprises. This challenges the widely held belief that robust ESG practices automatically translate into better access to funding. The results suggest that other factors may play a more critical role in influencing a company’s financial health and capital-raising potential. The study contributes to the broader discourse on sustainable finance by providing empirical evidence that questions the direct financial benefits of high ESG performance, particularly in the context of large and very large publicly listed companies in Belgium.