<![CDATA[Research aims: This study explores the influence of Environmental, Social, and Governance (ESG) practices on the cost of debt within corporations. The primary objective is to determine whether comprehensive ESG adherence can function as a mechanism to reduce financial liabilities by lowering borrowing costs. Design/Methodology/Approach: The research adopts a quantitative methodology using a dataset of ESG scores. The analytical approach involves comparing corporate debt costs with overall ESG scores and with the disaggregated components—Environmental, Social, and Governance scores—independently. Research findings: The findings indicate that overall ESG scores are associated with a reduction in the cost of debt. However, when the components are analyzed separately, only the Governance score shows a statistically significant negative correlation with debt costs. Environmental and Social scores do not demonstrate a meaningful standalone effect. This suggests creditors place greater emphasis on governance-related factors in credit risk evaluation. Theoretical contribution/ Originality:. This study contributes to the literature on sustainable finance by providing empirical evidence of the differential impact of ESG components on corporate financing costs. It advances understanding of how ESG factors—particularly governance—play a role in shaping firms’ financial outcomes. Practitioner/Policy implication: The results highlight the strategic importance of governance-focused ESG initiatives for firms seeking to lower financing costs. Policymakers and corporate strategists should recognize the value creditors place on governance practices and incorporate this insight into ESG frameworks and disclosure standards. Research limitation/Implication: While the study reveals important insights into ESG’s impact on debt costs, it is limited by its reliance on available ESG score datasets and may not capture qualitative factors or long-term effects. Future research should explore longitudinal impacts, cross-country variations, and sector-specific dynamics to deepen understanding of ESG-financing linkages.]]>
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