The Impact of ESG on Performance of Latvian Companies Listed on Baltic Stock Exchange

One of the key goals of stock exchange is to foster environment where all its participants – investors, regulators, companies – can be involved sharing economic opportunities were also the ESG (environmental, social and governance) reporting plays crucial role to ensure more successful move for companies listed on Baltic stock exchange during the process of global transition to more sustainable economies. Moreover, it reinforces a more transparent and efficient market for all stakeholders. Therefore, the key goal of this research paper is to analyse existing ESG requirements, practices and ESG reports of Latvian companies listed on Baltic stock exchange and investigated whether there is any mutual relation between corporate sustainability performance and performance of these companies. Main tasks were: to investigate Nasdaq Riga ESG requirements for Latvian companies listed on Baltic stock exchange and analyse existing approaches in all Latvian companies listed on Baltic stock exchange per period from year 2017 to year 2021; to investigate whether there is any mutual relation and impact between companies’ ESG practices and its performance. The study includes a sample of 27 Latvian listed companies on Baltic stock exchange representing 9 industrial sectors in year 2017 to 16 ones representing 10 industries in year 2021. The findings of this research paper shows that there are positive effects of the ESG practices on performance of Latvian companies on Baltic stock exchange. This supports the significance of the ESG reporting of these companies during the process of global transition to more sustainable economies. Moreover, results of this research provide insights for the companies’ management and other stakeholders regarding prioritizing necessary resource related ESG activities because these activities do have the impact on companies’ performance. The results of this study contribute to the nowadays growing literature on financial implications of the ESG performance disclosures and might be of interest to academic researchers as well as educators and practitioners.