ESG-Financial Indicators Analysis Based on Causal Hypothesis Graphs

Abstract

In recent years, corporate management has shifted its focus from solely financial indicators to also include ESG indicators, which assess the environmental (E), social (S), and governance (G) aspects. However, the impact of ESG indicators on company management varies depending on several factors and is closely tied to the specific social issues each company prioritizes. Consequently, to develop a comprehensive business analysis model that incorporates both ESG and financial indicators, we developed a method for analyzing ESG-financial indicators using a causality hypothesis graph. This method enables us to examine (1) the interrelationships between different indicators and (2) the validation of hypotheses regarding the issues that a company should prioritize.