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ESG and reputation: The case of sanctioned Italian banks
Author(s) -
Murè Pina,
Spallone Marco,
Mango Fabiomassimo,
Marzioni Stefano,
Bittucci Lucilla
Publication year - 2020
Publication title -
corporate social responsibility and environmental management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.519
H-Index - 73
eISSN - 1535-3966
pISSN - 1535-3958
DOI - 10.1002/csr.2047
Subject(s) - sanctions , reputation , business , corporate governance , accounting , sample (material) , corporate social responsibility , meaning (existential) , finance , actuarial science , public relations , political science , psychology , chemistry , chromatography , law , psychotherapist
Abstract The aim of this paper is to investigate whether banks adopt Environmental, Social, and Governance (ESG) practices to reduce reputational damage due to financial penalties and whether the adoption of ESG factors can reduce the probability to receive sanctions. This study extends a previous research (Guerello et al., North American Journal of Economics and Finance , 2018, 48 , 591–612) by including ESG scores as determinant of the probability to be sanctioned. The econometric analyses in this paper are based on a sample of 13 Italian banks for the years 2008–2018 and includes ESG scores provided by both Thomson Reuters and Bloomberg. The research shows that ESG score and the probability of sanctions are positively related. However, a careful analysis of causal directions clarifies the meaning of such positive relationship: receiving financial penalties is detrimental for banks reputations, therefore it's necessary for banks to improve their reputation through the adoption of ESG practices.