ESG Performance, Trust, and Financial Outcomes

In the face of global challenges related to climate change, social responsibility, and ethical governance, ESG (Environmental, Social, and Governance) ratings have become a tool for risk assessment and a key element in building stakeholder trust. This chapter analyzes how ESG strategies affect the financial performance of European food companies, emphasizing the mediating role of investor trust. The analysis period is 2020–2024, covering companies listed on European stock exchanges. ESG ratings and financial data were obtained from the LSEG database. The study applied structural equation modeling (SEM). The results reveal that ESG has a positive but modest impact on firm performance, primarily operating through trust-related mechanisms, with financial stability emerging as a stronger mediator than market-based indicators. The findings highlight that while ESG enhances transparency and credibility, its financial benefits depend on trust-building efforts and consistent disclosure practices within the highly regulated and reputation-sensitive food sector.