The trade-off between ESG commitment and operational performance: an analysis of corporate companies in the Ibero-Maghrebi context amidst climate change

The present study investigates the hypothesis that greater efforts in ESG are associated with a deterioration in the operational performance of listed companies in the Ibero-Maghrebi context. The analysis provides a measure of knowledge, from the perspective of trade-off theory, of how environmental, social and governance (ESG) commitment can influence operating behaviour. The objective of this study is to achieve this through an analysis of economic-financial ratios, such as return on assets (ROA) and return on equity (ROE). The sample is derived from a study of 460 firm-year observations of listed companies in Spain and Morocco. The time horizon under scrutiny in this study extends from 2018 to 2022, encompassing the repercussions of the pandemic crisis. Contrary to the findings of previous studies, the present research suggests that companies in the Ibero-Maghrebi context do not typically demonstrate a correlation between increased effort in ESG initiatives and probable deterioration in operating performance. This evidence suggests that the relationship between operating performance and compensatory theory is more complex than previously theorised. Moreover, the findings of this study demonstrate that a greater effort on the part of the companies in this sample for better management of intensive water use translates into better operational performance. In view of the global climate change, companies must consider the environmental implications of investment decisions. First published online 17 September 2026