The Impact of ESG Scores on the Financial Performance and Dividend Policy of Banks in the Eurozone

Abstract

This thesis examines the impact of Environmental, Social and Governance (ESG) scores on the financial performance and dividend policy of banks in the Eurozone. With increasing stakeholder attention, ESG scores have become an important instrument for evaluating companies' ethical and sustainable practices, especially in the banking sector. The study examines the relationship between ESG scores and financial performance, focusing on return on equity (ROE), and analyses how ESG scores affect dividend policy. Using data from 34 significant Eurozone banks from 2014 to 2023, the analysis is applied to regression models to determine the effects of ESG scores. The results show that higher ESG scores have a positive impact on both financial performance and dividend payouts, emphasising the importance of ESG integration. The study provides valuable insights for investors, managers and policymakers in optimising ESG practices in the banking industry.