The Relationship between ESG and the Cost of Capital in the Luxury Goods Industry

The integration of Environmental, Social and Governance (ESG) criteria into corporate strategies and financial markets has gained increasing relevance in the assessment of risk, information transparency, and access to capital. This thesis analyzes the relationship between ESG and the cost of capital in the luxury goods industry, with particular attention to the cost of equity, the cost of debt, and the Weighted Average Cost of Capital (WACC). After reviewing the relevant literature and outlining the specific characteristics of the luxury industry, the research adopts an econometric approach based on a sample of listed companies operating in different luxury sub-sectors. The empirical analysis uses Bloomberg ESG Scores, interpreted in this study as measures of the level of ESG disclosure provided by firms. The objective is to understand whether, and how, ESG-related information is associated with the financing conditions of luxury firms, in an industry characterized by the high relevance of intangible assets, reputational pressures, and growing attention to sustainability.