Rethinking the effect of ESG practices on profitability through cross-dimensional substitutability.

Over the last thirty years, sustainable business practices and ESG ratings have become increasingly popular in the business context and academic debate. Nonetheless, due to differences in methodological and theoretical approaches, more consensus has yet to be reached in the economic literature on the relationship between ESG practices and financial performance at the firm level. This work addresses the question empirically, focusing on a sample of firms listed in the Euro Stoxx 300 index.