{"status":"ok","message-type":"work","message-version":"1.0.0","message":{"indexed":{"date-parts":[[2026,3,24]],"date-time":"2026-03-24T18:09:35Z","timestamp":1774375775748,"version":"3.50.1"},"reference-count":97,"publisher":"MDPI AG","issue":"3","license":[{"start":{"date-parts":[[2022,8,5]],"date-time":"2022-08-05T00:00:00Z","timestamp":1659657600000},"content-version":"vor","delay-in-days":0,"URL":"https:\/\/creativecommons.org\/licenses\/by\/4.0\/"}],"funder":[{"DOI":"10.13039\/501100001871","name":"ADVANCE-CSG, from the Funda\u00e7\u00e3o para a Ci\u00eancia e Tecnologia (FCT Portugal)","doi-asserted-by":"publisher","award":["UIDB\/04521\/2020"],"award-info":[{"award-number":["UIDB\/04521\/2020"]}],"id":[{"id":"10.13039\/501100001871","id-type":"DOI","asserted-by":"publisher"}]}],"content-domain":{"domain":[],"crossmark-restriction":false},"short-container-title":["IJFS"],"abstract":"<jats:p>This study examines the association between firms\u2019 environmental, social, and governance (ESG) performance and the cost of capital for the largest European firms listed on the STOXX Euro 600 in a large panel from 2002 to 2018. We find that ESG is priced by both debt and equity markets, although in different directions. While better ESG performance is associated with a lower cost of equity, the relationship is positive regarding the cost of debt. We also account for industry idiosyncrasies. The relationship with the cost of equity is penalized for firms lagging in ESG performance compared with industry peers, and the industry median corporate sustainability performance score is around optimal to balance the cost of equity and cost of debt. We also find that ESG is not influential in shaping firms\u2019 cost of capital in periods of financial and sovereign crises. Overall, in the same research setting, we find that the channels of firms\u2019 cost of capital composition behave differently in response to changes in sustainability performance.<\/jats:p>","DOI":"10.3390\/ijfs10030063","type":"journal-article","created":{"date-parts":[[2022,8,7]],"date-time":"2022-08-07T22:51:46Z","timestamp":1659912706000},"page":"63","update-policy":"https:\/\/doi.org\/10.3390\/mdpi_crossmark_policy","source":"Crossref","is-referenced-by-count":65,"title":["Sustainability Performance and the Cost of Capital"],"prefix":"10.3390","volume":"10","author":[{"ORCID":"https:\/\/orcid.org\/0000-0002-1031-0032","authenticated-orcid":false,"given":"Tiago","family":"Gon\u00e7alves","sequence":"first","affiliation":[{"name":"ISEG\u2014Lisbon School of Economics and Management, Universidade de Lisboa, Advance\/CSG, 1200-781 Lisboa, Portugal"}]},{"given":"Jo\u00e3o","family":"Dias","sequence":"additional","affiliation":[{"name":"ISEG\u2014Lisbon School of Economics and Management, Universidade de Lisboa, 1200-781 Lisboa, Portugal"}]},{"ORCID":"https:\/\/orcid.org\/0000-0003-4177-5673","authenticated-orcid":false,"given":"Victor","family":"Barros","sequence":"additional","affiliation":[{"name":"ISEG\u2014Lisbon School of Economics and Management, Universidade de Lisboa, Advance\/CSG, 1200-781 Lisboa, Portugal"}]}],"member":"1968","published-online":{"date-parts":[[2022,8,5]]},"reference":[{"key":"ref_1","doi-asserted-by":"crossref","first-page":"1669","DOI":"10.1080\/1351847X.2021.1924216","article-title":"Modeling demand for ESG","volume":"27","author":"Ahmed","year":"2021","journal-title":"The European Journal of Finance"},{"key":"ref_2","doi-asserted-by":"crossref","first-page":"1409","DOI":"10.1108\/CG-06-2020-0258","article-title":"ESG impact on performance of US S&P 500-listed firms","volume":"20","author":"Alareeni","year":"2020","journal-title":"Corporate Governance: The International Journal of Business in Society"},{"key":"ref_3","doi-asserted-by":"crossref","first-page":"265","DOI":"10.1111\/acfi.12567","article-title":"Institutions, banking structure and the cost of debt: New international evidence","volume":"61","year":"2021","journal-title":"Accounting & Finance"},{"key":"ref_4","doi-asserted-by":"crossref","first-page":"101932","DOI":"10.1016\/j.frl.2021.101932","article-title":"Sustainable banking: A literature review and integrative framework","volume":"42","author":"Aracil","year":"2021","journal-title":"Finance Research Letters"},{"key":"ref_5","doi-asserted-by":"crossref","first-page":"679","DOI":"10.1007\/s10551-013-1714-2","article-title":"Corporate social responsibility and credit ratings","volume":"117","author":"Attig","year":"2013","journal-title":"Journal of Business Ethics"},{"key":"ref_6","doi-asserted-by":"crossref","first-page":"82","DOI":"10.1016\/j.gfj.2018.03.002","article-title":"Are more corporate social investments better? 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