This chapter investigates the relationship between corporate ESG (Environmental, Social, and Governance) performance and the cost of debt (CoD) incurred by firms. Building on prior research, it explores whether strong ESG practices lower perceived credit risk, resulting in favorable borrowing terms from banks. The study employs ESG scores from the Bloomberg Terminal and financial data from Orbis, analyzing a sample of 107 EU-based companies across capital-intensive and human capital-focused industries over five years (2017–2021). The findings suggest a significant negative relationship between ESG performance and CoD, with higher ESG scores correlating with reduced borrowing costs. Control variables such as profitability, firm size, and financial leverage were also assessed. Results highlight the growing integration of ESG metrics into credit risk evaluations, underscoring the role of sustainable finance in incentivizing corporate responsibility.