Premium
Relating Environmental, Social, and Governance scores and sustainability performances of firms: An empirical analysis
Author(s) -
Rajesh R.,
Rajendran Chandrasekharan
Publication year - 2020
Publication title -
business strategy and the environment
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.123
H-Index - 105
eISSN - 1099-0836
pISSN - 0964-4733
DOI - 10.1002/bse.2429
Subject(s) - sustainability , corporate governance , bootstrapping (finance) , corporate social responsibility , business , moderation , latent variable , empirical research , accounting , empirical evidence , environmental economics , econometrics , economics , psychology , political science , public relations , social psychology , statistics , ecology , mathematics , philosophy , finance , biology , epistemology
Environmental, Social, and Governance (ESG) scores can act as an indicator for sustainability performance of organizations. This paper explores an empirical evidence for the relationship binding ESG scores and sustainability performances of firms. We observe and evaluate the ESG performance scores of 1,820 firms globally for 5 years, from 2014 to 2018 on 10 major themes and over 400 different indicators, as listed by Thomson Reuters and is captured from the Bloomberg terminal data. We posit five hypotheses to check the relations binding ESG scores and the total sustainability performances of firms. A Partial Least Square (PLS) analysis and standard bootstrapping using Smart PLS 3.0 software is used to observe the results and to evidence the direct and moderating effects among latent variables contributing to sustainability performances. We observe a significant and negative moderating effect of ESG performances, independently over the all direct relations, considering their relationship to ESG performances. One of the major implications of this research is in the direction of assigning priorities while considering environmental‐, social‐, and governance‐related themes in the implementation of any strategies or policies into practice.