Role of ESG Ratings in Shaping Investment Attractiveness: Insights from BRICS Countries

Aleksandra Egorova

doi:10.17323/j.jcfr.2073-0438.19.1.2025.5-15

Aleksandra Egorova HSE University, Moscow, Russia https://orcid.org/0000-0001-5296-0466

DOI: https://doi.org/10.17323/j.jcfr.2073-0438.19.1.2025.5-15

Keywords: ESG, ESG ratings, green economy, investment attractiveness, corporate social responsibility, CSR, sustainable development, environmental factors, social factors, corporate governance, financial performance, BRICS countries

Abstract

The research objective is to analyze the impact of ESG ratings on the investment attractiveness of companies in BRICS countries in comparison with other countries, as well as to study the sectoral specifics of such influence in BRICS countries. The methodology is based on the regression analysis of the impact of ESG ratings and the duration of their disclosure on investment attractiveness indicators, including Tobin’s Q, EV/EBITDA, P/BV, and WACC. The study utilizes a dataset comprising 16 691 observations for 1859 companies from 57 countries between 2014 and 2022, including 2116 observations for 236 companies from BRICS countries. The analysis revealed that an increase in ESG ratings positively affects market value (Tobin’s Q) and risk reduction (WACC) in BRICS countries, while in other countries, their influence is associated with increase in EV/EBITDA and decrease in P/BV. Sector analysis revealed that ESG rating increase positively influence market value in information technology and communication sectors. This study is the first to conduct a comparative analysis of ESG impact in BRICS countries and other regions, including a sectoral analysis, which makes the findings valuable for shaping ESG strategies in this market and assessing business sustainability.

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