Sustain and Deliver: Capturing the Valuation Effects of Corporate Sustainability

73 Pages Posted: 22 Jun 2018 Last revised: 6 Jan 2022

See all articles by Mohammed Zakriya

Mohammed Zakriya

IÉSEG School of Management; CNRS; Lille Economie Management (LEM) UMR 9221; University of Lille

Date Written: January 5, 2022


This paper identifies a select few indicators from a large set of environmental, social, and governance (ESG) factors; and introduces a corporate sustainability measure. The sustainable part of corporate social performance completely explains its positive relation with firm value. In parallel, those ESG initiatives that are irrelevant to sustainability do not affect firm value. These findings remain robust even after controlling for potential endogeneity concerns using multiple identification strategies. Moreover, corporate sustainability is positively associated with stock returns and sustainability-based hedge portfolios would have generated abnormal returns of over 4% per year in the sample period. Together, these results imply that only the sustainable aspects of ESG are associated with superior financial performance in terms of both accounting- and market-based value.

Keywords: Corporate sustainability, corporate social performance, ESG, SRI, CSR

JEL Classification: G32, G34, L21, M14, Q56

Suggested Citation

Zakriya, Mohammed, Sustain and Deliver: Capturing the Valuation Effects of Corporate Sustainability (January 5, 2022). ESADE Business School Research Paper Series, 9th Conference on Financial Markets and Corporate Governance (FMCG) 2018, Available at SSRN: or

Mohammed Zakriya (Contact Author)

IÉSEG School of Management ( email )

3 rue de la Digue
Lille, 59000

CNRS ( email )


Lille Economie Management (LEM) UMR 9221 ( email )


University of Lille ( email )

Cité Scientifique
Villeneuve-d'Ascq, 59650

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