Preliminary communication
https://doi.org/10.62366/crebss.2025.2.003
Correlation analysis of the ESG score and profitability and investment ratios in Croatia
Eleonora Galinec
; University of Zagreb, Faculty of Economics and Business, Croatia
Anita Čeh Časni
; University of Zagreb, Faculty of Economics and Business, Croatia
*
* Corresponding author.
Abstract
This paper examines the relationship between the ESG score, as measures of effectiveness in sustainable, environmental and social responsible management, and profitability ratio reflecting business performance based on accounting categories, as well as investment ratio based on market valuation. The objective is to determine whether successful managing of the ESG issues is associated with higher business profitability and greater stock attractiveness, in line with the assumptions of the Corporate Sustainability Reporting Directive (CSRD). Based on a sample of nine Croatian non--financial listed companies from various industries over the period from 2020 to 2023, two correlation analyses were conducted. The variables used include the Bloomberg ESG score, return on assets as the selected profitability ratio, and earnings yield as the selected investment ratio. The results indicate the absence of a statistically significant relationship between ESG scores and either net return on assets or earnings yield in the Republic of Croatia. This implies that sustainability practices in Croatia are not yet sufficiently developed for their potential benefits to be reflected in other business aspects in the short-term.
Keywords
ESG score; correlation analysis; sustainability; investment ratio; profitability
Hrčak ID:
342034
URI
Publication date:
22.12.2025.
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