1. Introduction

In an increasingly connected and socially conscious global context, ESG's central role in financing and investment decisions is no longer limited to compliance with regulations and ethical standards. This research paper explores in depth the multi-faceted impact of ESG elements in the investment and financing process. The research paper delves into the interrelationship between cost of capital and ESG scores, as well as the specific needs of investors for ESG data, and further analyzes specific examples of ESG applications in debt financing scenarios. In addition, the study explores in depth the central role of ESG elements in overall performance during the investment and financing process and the interrelationship between return on investment and ESG performance. In short, as the central role of ESG in driving positive change is increasingly recognized, the value of its financing and investment decisions in the global financial system is being reshaped to steer it toward a more durable and just future.

2. In terms of financing and investment, the connotation and extension of ESG

2.1. Environmental dimension

In the structure of ESG, the Environmental dimension plays an extremely critical role. The environment is the external economic or political conditions in which a business operates. This dimension focuses on how companies have an impact on the natural environment in their daily operations, which covers several key areas such as the efficient use of resources, the effective management of waste, strict emission controls, and the maintenance of biodiversity. In some developed countries, environmental policy has become one of the important factors affecting economic growth, and these countries often restrict excessive investment in enterprises through environmental protection laws and regulations. Some financial institutions have launched financial products such as green bonds and green credits, which are mainly aimed at supporting environmental protection projects and enterprises in their green transformation. In general, in the process of making financing and investment decisions, the impact of environmental factors is becoming more and more obvious.

2.2. The section on Social

The social dimension plays an integral role in the structure of the ESG, which focuses on the performance of companies in carrying out their social responsibilities and community engagement. There is a close relationship between the reputation of an enterprise and its brand value. An enterprise can enhance its brand value by creating a good social image, and the reputation of an enterprise can provide consumers with better products or services. A company's performance in society not only has an impact on its reputation and brand value, but may also have a positive impact on its long-term financial health. Engaging in such activities boosts the company's reputation among the public and simultaneously elevates customer loyalty and worker contentment. Overall, it is extremely critical to assess a company's performance in an ESG environment from a social perspective. In the process of enterprise development, enterprises need to assume corresponding social responsibilities.

2.3. Analysis from the perspective of corporate Governance

In the framework of ESG, corporate Governance relates to a company's internal decision-making process, equity distribution, transparency, and accountability to shareholders and other stakeholders. There is a strong correlation between a company's ability to innovate and its continued growth. In the U.S., rating agencies often rate these companies as "best-in-class." Investors hold this view because they perceive these companies to be excellent in several aspects, including environmental protection, social responsibility and corporate governance, as well as having a higher ability to cope with risks and the possibility of sustainable development. In the United States, rating agencies are often the major shareholders or largest creditors of companies. In addition, regulators can also supervise companies from the perspective of corporate governance. In the process of making investment decisions, investors should also fully consider the various impacts of ESG to ensure that capital growth and social responsibility can achieve a win-win situation.

3. The impact of ESG on financing decisions

3.1. The relationship between financing cost and ESG rating is studied

In the current financial context, environmental, social and corporate governance (ESG) are gradually becoming the key factors affecting the financing cost of enterprises. ESG rating is regarded as the core criterion to measure a company's performance in these fields, and it has a significant impact on a company's financial cost. A strong ESG rating can send a positive signal to investors and customers, the improved ESG rating has also enabled the company to build a larger customer base and attract more investors [1].Enterprises holding elevated ESG scores are typically eligible for financing costs that are less expensive. The transparency and robustness of ESG ratings are also core factors affecting their relationship with funding costs. At the same time, it is found that ESG performance can reduce the cost of debt financing by alleviating the information risk within the enterprise and increasing the attention of external institutional investors [2], It can gain the trust and support of investors, companies should also strive to enhance communication with investors and improve the transparency of ESG information.

3.2. Investors have specific needs for ESG information

The demand for ESG information is increasing, which not only reflects investors' concern for sustainable development, but also shows their firm pursuit of risk management and long-term value creation. Many countries and regions have introduced relevant policies and guiding principles with the aim of encouraging or requiring companies to disclose ESG-related information. The Dodd-Frank Act in the United States, to some extent, encourages companies to disclose financial data related to the company's growth strategy, financial risks and other important information. In order to meet investors' expectations more effectively, it is necessary for companies to strengthen the transparency and openness of ESG information to ensure the high quality and transparency of information. In addition, companies should improve their management level by strengthening internal management and make reasonable disclosure under the supervision of external regulators. The use of ESG-principles can give an advantage to investment companies in the market with a high degree of volatility [3].

3.3. Case study of ESG's specific application in debt financing

Globally, numerous leading firms have opted for ESG (Environmental, Social, and Corporate Governance) to explore more thoroughly their investment and financial tactics. Within this framework, the paper delves into the ways in which P&G enhances its financial outcomes by employing various debt financing tools, from a theoretical viewpoint. The research offers a comprehensive examination of Proctor &Gamble's approaches to debt financing within the ESG (Environmental, social, and corporate governance) sector.

Proctor & Gamble's ESG Debt financing case study:

Pertaining to Environmental:

1.Ongoing manufacturing operations: P&G is striving to mitigate the adverse effects of its production practices on the environment through the adoption of more effective production techniques and the diminution of waste and pollutants to lower carbon emissions.

2.Green Supply Chain Management: The firm dedicates itself to advancing the supply chain's ongoing growth and sustaining tight partnerships with suppliers to guarantee that its products and manufacturing methods adhere to environmental protection norms.

Social related issues:

1. Employee welfare: P&G is always committed to ensuring the welfare and safety of employees, providing high-quality working environment and training opportunities, and actively promoting the development of diversity and inclusion of employees.

2. Contribution to the community: The company actively contributes to society through various charitable donations, community projects and volunteer activities, thereby increasing its social recognition in fulfilling its social responsibilities.

Issues related to corporate Governance:

1. Ethics and transparency in corporate governance: P&G strictly adheres to high standards of ethics and transparency to ensure that investors and creditors have an in-depth understanding of the corporate governance structure and operations.

2. From the perspective of risk management, the company has successfully built a sound risk management framework and internal monitoring mechanism, which greatly reduces possible risks in operation and enhances creditors' trust in the long-term stable operation of the company.

Various impacts of ESG debt financing:

1. Lower financing costs: P&G's proactive approach to ESG has enhanced its reputation in the debt market, which may lead to lower borrowing costs and a more favorable financing environment.

2. On investor acceptance: More and more investors are starting to consider ESG factors in their investment decisions and are showing a higher level of attention and interest in businesses that are committed to promoting sustainable development. Therefore, the ESG debt financing plan implemented by P&G can significantly attract more investors, thus improving the sustainability and stability of its financing activities.

3. Enhancing brand value: P&G has successfully established a good corporate image and brand reputation by actively participating in ESG practice activities. This not only builds deep trust among investors and creditors, but also wins the company wider praise in the market and the loyalty of customers.

From the perspective of corporate governance structure, this paper compares the corporate governance mechanism into three types: equity balance type, board oriented type and manager controlled type, and discusses the debt financing situation and risk bearing situation of enterprises under different equity structure combined with cases. Through in-depth analysis of specific cases, we can realize that there is a close relationship between ESG rating and debt financing conditions, and how ESG factors are incorporated into the decision-making process of debt financing.

4. How does ESG influence investment decisions

4.1. The important role of ESG factors

The significance of ESG elements is growing in the assessment of investments. Investors integrating environmental, social and governance (ESG) aspects into investment decisions require ESG data of sufficient quality [4]. Such elements affect not just how investors view corporate social responsibility and sustainable growth, but also play a significant role in the risks and benefits associated with the investment.

Environmental: Over the past decade, environmental issues have emerged as one of the most important challenges in global economic development, and investors are increasingly focusing on the environmental variables that affect their investment behavior.

Social factor: Social responsibility can help companies achieve sustainable development and bring benefits to consumers. The positive attitude shown by a company in fulfilling its social responsibilities, such as providing a fair working environment, protecting the rights of consumers and encouraging community participation, helps to enhance the brand's awareness and position in the market, thus attracting more consumers and partners, and creating positive economic returns for the company.

Corporate Governance: concerns the composition of the board of directors, shareholders' rights, transparency and ethics. With the development of economic globalization, more and more companies are applying corporate governance as a strategic tool. Efficient corporate governance can not only help to reduce the operational risks faced by enterprises, but also improve the efficiency of the decision-making process, enhance the confidence of investors, and thus have a positive impact on the performance of enterprises in the market.

In general, ESG factors are important in investment decision-making and in promoting sustainable business practices [5]. The impact of ESG factors in the investment evaluation process has gradually become prominent, and these factors not only have an impact on the long-term competitiveness of enterprises and market performance, but also have an impact on investors in risk management and value creation.

4.2. The correlation between the rate of return on investment and ESG performance is discussed

In the process of studying how ESG (environmental, social and corporate governance) influences investment decisions, it becomes particularly important to examine the relationship between return on investment and ESG performance. The better the ESG performance of enterprises, the less capital expenditure of enterprises [6]. The relationship between ESG performance and investment return is not immutable, but is influenced by a number of variables, including but not limited to market conditions, industry characteristics, and firm size. At present, the phenomenon of "paying more attention to finance than management" and the status quo of low quality of internal control in listed companies in China have led to a large number of companies with poor performance in China's securities market.

5. Conclusions

The role of ESG (business and investor) is increasingly critical in the process of capital raising and investment decisions, and is closely linked to the long-term value creation of the company. When companies adopt effective environmental and social management practices, combined with effective management strategies, their long-term earnings potential and stability are enhanced. Over time, more and more investors are starting to think about the role ESG plays in their investment decisions, creating unprecedented opportunities and challenges for businesses and investors alike. Companies should effectively integrate ESG-related factors into strategic planning and decision-making, providing accurate, transparent, and verifiable ESG data to better meet the needs of investors and other stakeholders. In order to reduce the risk of investment and pursue long-term profits, investors can construct a variety of investment portfolios. This approach helps to enhance the long-term value of the business, reduce latent risks, and achieve the sustainable development goals of the business.