Proceedings of the 5th International Conference on Economic Development and Business Culture (ICEDBC 2025)

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ESG Performance and Profitability in UK Non-Financial Firms

Authors
Hangyu Zuo1, *
1School of Slavonic and East European Studies, University College London, London, WC1E 6BT, England, United Kingdom
*Corresponding author. Email: yjmshzu@ucl.ac.uk
Corresponding Author
Hangyu Zuo
Available Online 26 February 2026.
DOI
10.2991/978-94-6239-604-3_33How to use a DOI?
Keywords
ESG; profitability; leverage; panel data; UK listed firms
Abstract

This study examines how environmental, social, and governance (ESG) performance relates to firm profitability in the United Kingdom’s main board market during 2009–2024. The analysis links ESG indicators from the London Stock Exchange Group (LSEG) to financial fundamentals from Compustat Global to form an unbalanced panel of 620 non-financial firms. The study focuses on return on assets (ROA) as the main outcome and treats financial leverage, liquidity, asset efficiency, and firm size as controls. Baseline fixed-effects regressions show that higher ESG scores and higher governance pillar scores are associated with lower ROA after controlling for leverage, size, cash, asset turnover, and current ratio. The negative link does not appear for environmental and social pillars. Industry-level estimations show that the effect differs across manufacturing, services, trade, and retail sectors. The results suggest that ESG investment may impose short-run operating costs for UK listed firms, and that the market rewards efficiency and liquidity more than ESG disclosure during the sample period. The study highlights the need to balance sustainability goals and financial performance, especially in regulated or low-margin industries.

Copyright
© 2026 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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Volume Title
Proceedings of the 5th International Conference on Economic Development and Business Culture (ICEDBC 2025)
Series
Advances in Economics, Business and Management Research
Publication Date
26 February 2026
ISBN
978-94-6239-604-3
ISSN
2352-5428
DOI
10.2991/978-94-6239-604-3_33How to use a DOI?
Copyright
© 2026 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

Cite this article

risenwbib
TY  - CONF
AU  - Hangyu Zuo
PY  - 2026
DA  - 2026/02/26
TI  - ESG Performance and Profitability in UK Non-Financial Firms
BT  - Proceedings of the 5th International Conference on Economic Development and Business Culture (ICEDBC 2025)
PB  - Atlantis Press
SP  - 309
EP  - 318
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6239-604-3_33
DO  - 10.2991/978-94-6239-604-3_33
ID  - Zuo2026
ER  -