Impact of Environmental, Social, and Governance Information on Economic Performance: Evidence of a Corporate ‘Sustainability Advantage’ from Europe

Both UN Agenda 2030 and the Directive n. 2014/95/EU have recently promoted a marked improvement in sustainability disclosure, especially for larger companies or groups. Starting from this premise, we carried out an original study on the financial materiality of the E-S-G (environmental, social and g...

Full description

Saved in:
Bibliographic Details
Published in:Sustainability 2019-03, Vol.11 (6), p.1738
Main Authors: Taliento, Marco, Favino, Christian, Netti, Antonio
Format: Article
Language:English
Subjects:
2-Methylisoborneol
Behavior
Boards of directors
Business competition
Climate change
Competition
Competitive advantage
Corporate responsibility
Emission standards
Ethics
Human rights
Impact analysis
Investments
Multivariate statistical analysis
Social investing
Social responsibility
Stakeholders
Stock exchanges
Sustainability
Sustainability reporting
Value creation
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:Both UN Agenda 2030 and the Directive n. 2014/95/EU have recently promoted a marked improvement in sustainability disclosure, especially for larger companies or groups. Starting from this premise, we carried out an original study on the financial materiality of the E-S-G (environmental, social and governance) information of primary companies listed on major European indices in Belgium, France, Germany, Italy and Spain (BEL, CAC, DAX, FTSE-MIB, IBEX). Within the Stakeholder Theory and the Corporate Social Responsibility (CSR)–Corporate Social Perfomance (CSP) framework, our empirical analysis examined the impact of non-financial results (assessed through sustainability indicators) on economic (financial and market) performance in the timespan 2014–2017. We propose a different approach from previous studies, based on a PLS (Partial least squares)/SEM (Structural equation modeling) methodology together with the unprecedented consideration of “ESG” measures (Environmental, Social and Governance), either absolute (scores) or relative (extra-performance over industry sector). We find that, despite the absolute level of the individual ESG scores not being impactful, the “distance” from the industry average–normal figures (excess or abnormal ESG performance) is positively relevant, collaterally revisiting the notion of competitive advantage in sustainability terms. Corporate size is shown to be a significant background factor (as slack resources proxy). Social, environmental and governance responsibility (to all stakeholders) appear to be important as a competitive factor of the modern firm.
ISSN:2071-1050
2071-1050
DOI:10.3390/su11061738