When does sustainability fail? The contrasting impact of ESG on entrepreneurial brand value and financial performance

2026. International Entrepreneurship and Management Journal.

L Valenzuela-Fernández, C Espinosa-Méndez, LB Legoburo

Abstract:

This study investigates how Environmental, Social, and Governance (ESG) performance shapes entrepreneurial brand value (EBV) and financial performance, with particular attention to differences between business-to-business (B2B) and business-to-consumer (B2C) markets. The analysis draws on panel data from Interbrand’s Best Global Brands and ESG and financial indicators from Refinitiv Thomson Reuters Eikon, comprising 734 firm-year observations between 2012 and 2023, and applies a dynamic panel System Generalized Method of Moments (GMM) estimator to address heterogeneity and endogeneity. Results indicate that ESG performance enhances financial outcomes, primarily through its environmental and social dimensions, but exerts an overall negative effect on EBV. The evidence reveals important contextual nuances: in B2B markets, ESG initiatives strengthen EBV by fostering trust and reliability, whereas in B2C markets, consumer skepticism and perceptions of superficiality constrain brand engagement. Overall, the study challenges the notion of a universally positive ESG–brand value relationship, refines theoretical perspectives on EBV, and offers practical guidance for tailoring ESG strategies to distinct market contexts.

Palabras claves: Branding, Business Strategy and Leadership, Business Ethics, Corporate Governance, Corporate Social Responsibility, Sustainable Growth, Customer Satisfaction and Firm Performance Metrics

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