Financial Payoff of Sustainability in Mexican Companies: ESG Performance, Profitability and Firm Value

Abstract

This study empirically investigates the relationship between Environmental, Social, and Governance (ESG) scores and the financial performance of Mexican companies traded at Bolsa Mexicana de Valores (BMV), based on firm value and profitability. The study used a quantitative method of correlational research. Using data from the Refinitiv, the study analyzes 103 companies operating in 37 different industries listed on the BMV over five years (2019–2023), excluding financial institutions. Ordinary least squares (OLS) regressions revealed a statistically significant, positive correlation between ESG scores associated with higher return on assets (ROA) and market value measured by Tobin’s Q). Stakeholder theory serves as the theoretical foundation, as ESG initiatives may enhance long-term value for stakeholders. The study found that ESG efforts contribute positively to ROA and Tobin’s Q of public companies in Mexico. This study focuses exclusively on Mexican companies, expanding the existing literature. Corporate decision makers and investors can gain insights into ESG’s role in Mexican companies’ financial strategy and stakeholder value creation.