Showing papers on "Corporate sustainability published in 2019"

The Consequences of Mandatory Corporate Sustainability Reporting

Abstract: A key aspect of the governance process inside organizations and markets is the measurement and disclosure of important metrics and information. In this chapter, we examine the effect of sustainability disclosure regulations on firms’ disclosure practices and valuations. Specifically, we explore the implications of regulations mandating the disclosure of environmental, social, and governance (ESG) information in China, Denmark, Malaysia, and South Africa using differences-in-differences estimation with propensity score matched samples. We find that relative to propensity score matched control firms, treated firms significantly increased disclosure following the regulations. We also find increased likelihood by treated firms of voluntarily receiving assurance to enhance disclosure credibility and increased likelihood of voluntarily adopting reporting guidelines that enhance disclosure comparability. These results suggest that even in the absence of a regulation that mandates the adoption of assurance or specific guidelines, firms seek the qualitative properties of comparability and credibility. Instrumental variables analysis suggests that increases in sustainability disclosure driven by the regulation are associated with increases in firm valuations, as reflected in Tobin’s Q. Collectively, the evidence suggest that current efforts to increase transparency around organizations’ impact on society are effective at improving disclosure quantity and quality as well as corporate value.

Effects of green supply chain management practices on sustainability performance

Abstract: The purpose of this paper is to explore the impact of eight dimensions of green supply chain management (GSCM) on economic, environmental and social performance, which are the three dimensions of corporate sustainability. The eight dimensions covered in this study are: green purchasing, green manufacturing, green distribution, green packaging, green marketing, environmental education, internal environmental management and investment recovery.,The relationships between dimensions of GSCM and sustainability performance are tested by using a plant-level survey. A proposed research model and hypotheses are tested by using cross-sectional face-to-face and e-mail survey data collected from manufacturing firms in Turkey. Structural equation modeling is used to test the proposed hypotheses.,Except for green purchasing, all GSCM dimensions are found to be related with at least one of the performance dimensions.,The results are important in highlighting the importance of GSCM in improving sustainability performance.,This paper enhances the understanding of the relationship between different dimensions of GSCM and the three sustainability performance factors. While there are very few studies examining the relationship between GSCM and corporate sustainability, this study is important in terms of exploring the effects of dimensions of GSCM applications on economic, environmental and social performance one by one, by examining these applications in the form of eight dimensions.

Do environmental, social, and governance activities improve corporate financial performance?

Abstract: This study investigated the relationship between corporate efficiency and corporate sustainability to determine whether firms concerned about environmental, social and governance (ESG) issues can also be efficient and profitable. We applied data envelopment analysis to estimate corporate efficiency and investigated the nonlinear relationship between corporate efficiency and ESG disclosure. Evidence shows that corporate transparency regarding ESG information has a positive association with corporate efficiency at the moderate disclosure level, rather than at the high or low disclosure level. Governance information disclosure has the strongest positive linkage with corporate efficiency, followed by social and environmental information disclosure. Moreover, we explored the relationship between particular ESG activities and corporate financial performance (CFP), including corporate efficiency, return on assets and market value. We found that most of the ESG activities reveal a non-negative relationship with CFP. These findings may provide evidence about voluntary corporate social responsibility (CSR) strategy choices for enhancing corporate sustainability.

Social sustainable supplier evaluation and selection: a group decision-support approach

Abstract: Organisational and managerial decisions are influenced by corporate sustainability pressures. Organisations need to consider economic, environmental and social sustainability dimensions in their de...

Rating the Raters: Evaluating how ESG Rating Agencies Integrate Sustainability Principles

Abstract: Environmental, social, and governance (ESG) rating agencies, acting as relevant financial market actors, should take a stand on working towards achieving a more sustainable development. In this context, the objective of this paper is, on the one hand, to understand how criteria used by ESG rating agencies in their assessment processes have evolved over the last ten years and, on the other hand, to analyze whether ESG rating agencies are contributing to fostering sustainable development by the inclusion of sustainability principles into their assessment processes and practices according to the ESG criteria. This research is based on a comparative descriptive analysis of the public information provided by the most representative ESG rating and information provider agencies in the financial market in two periods: 2008 and 2018. The findings show that ESG rating agencies have integrated new criteria into their assessment models to measure corporate performance more accurately and robustly in order to respond to new global challenges. However, a deep analysis of the criteria also shows that ESG rating agencies do not fully integrate sustainability principles into the corporate sustainability assessment process.

Business Cases for Sustainability: A Stakeholder Theory Perspective:

Abstract: The “business case for sustainability” is a notion often referenced in the corporate sustainability and corporate social responsibility literature. Whereas some see sustainability and the business ...

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

Abstract: 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.

Impact of disclosure and assurance quality of corporate sustainability reports on access to finance

Abstract: This paper investigates the impact of corporate social responsibility (CSR) disclosure quantity, quality, and external validation concerning assurance on capital constraints. We examine if these disclosure characteristics matter to the investors in the financial market, then they should be positively evaluated by financial market participants. More specifically, we study the effects of disclosure quantity, quality, and assurance on the access to financial resources for reporting firms. Analysis of data of an interna- tional sample for the period of 2007–2016 significantly supports the value relevance idea of CSR disclosure quality. We document that availability of more information about the firm's CSR initiatives eases the financial access. Furthermore, the quality and external assurance of CSR disclosure further strengthen the relationship between disclosure and access to finance. Our paper not only provides support for buying assurance but also argue for better assurance quality.

Employee proenvironmental behavior in Russia: The roles of top management commitment, managerial leadership, and employee motives

Abstract: Despite Russia’s large ecological footprint, there has been limited examination of environmental sustainability initiatives in Russian corporations Drawing on research on the importance of employee-level behaviors for the success of corporate sustainability initiatives, we focus on the proenvironmental behaviors (PEBs) of Russian employees We integrate scholarship on employees’ PEBs and the Russian cultural context to offer theory regarding three potentially important antecedents of employees’ PEBs: top management commitment to sustainability, the immediate manager’s environmental leadership, and the employee’s motivation Using self-report data from management development program attendees in Russia (N = 165), we examined the links between these factors and employees’ PEBs We also tested whether top management commitment moderated the impact of immediate managers’ leadership on employees’ PEBs We found that the immediate manager’s active environmental leadership (ie, transformational, contingent reward, and active management by exception) was positively related to employees’ PEBs Managers’ passive-avoidant environmental leadership (ie, passive management by exception and laissez-faire) was negatively related to PEBs, but only when top management was committed to sustainability Employees’ motives were linked to PEBs, but the nature of the relationship varied across motives External motivation was negatively related to PEBs, suggesting that using rewards to motivate PEBs may be detrimental Motivation that came from a desire to fulfill one’s values or avoid feeling bad about oneself was positively associated with PEBs Our work provides a foundation for future research on PEBs in Russia, and suggests new directions for research on employees’ PEBs in other settings

Causes and consequences of voluntary assurance of CSR reports: International evidence involving Dow Jones Sustainability Index Inclusion and Firm Valuation

Abstract: The purpose of this paper is twofold. First, the authors investigate a firm’s decision to provide a CSR report, and if so, whether to have the report assured and to seek higher quality assurance as reflected through the choices of the scope of the assurance and type of assurer, Big 4 accounting firm vs specialist consultant. Second, the authors investigate the impact of voluntary assurance of CSR reports, assurance scope and type of assurer on the likelihood of inclusion in the DJSI and on market valuation.,The study’s sample consists of 17,050 firm-year observations from 40 countries with CSR reports available from Corporate Register and ESG metrics available from ASSET4 over the period 2009–2015. The study first empirically examines the associations between CSR commitment and each of CSR report provision, CSR report assurance, assurance scope and type of assurer. It then examines that association between both inclusion in the DJSI and market valuation with each of CSR report assurance, assurance scope and type of assurer, using inclusion in the DJSI as an objective measure of a firm’s reputation for sustainability given its recognition as a leading indicator for corporate sustainability and market valuation as a reflection of the broader set of capital market participants.,The authors establish two key findings consistent with the predictions of signaling theory. First, we show that high CSR commitment firms are more likely to: provide standalone CSR reports; obtain assurance; obtain assurance from a Big 4 accounting firm; and, adopt higher assurance scope. Second, the authors find that both CSR report assurance and assurance scope increase the likelihood of inclusion in the DJSI, but that the type of assurance provider does not. Alternatively, the authors find that capital market participants appear to value the provision of a CSR report only when it is assured by a Big 4 accounting firm.,The results in the existing literature exploring the capital market benefits to CSR Assurance have been mixed. Firms that voluntarily obtain CSR Assurance incur a cost in doing so and must perceive a net benefit from obtaining such assurance. Despite the limited guidance currently provided by existing CSR standards, we establish the existence of benefits to obtaining CSR Assurance in terms of enhanced likelihood of DJSI inclusion and, more generally, enhanced market valuation. The discussions with DJSI analysts indicate that CSR assurance does enhance the perceived reliability of CSR data, thus improving user confidence.

Corporate Governance as a Key Driver of Corporate Sustainability in France: The Role of Board Members and Investor Relations

Abstract: This paper examines the relationships between corporate governance and corporate sustainability by focusing on two main components of companies’ governance structure: boards of directors (BoDs) and investor relations officers (IROs). We propose an original empirical strategy based on the 120 biggest French capitalizations for the year 2013, allowing us to measure boards of directors’ independence and expertise, as well as investor relations officers’ convictions and communication on corporate sustainability. Our results show that corporate governance has an ambiguous impact on corporate sustainability because of opposing forces: internal, external and intermediate forces. On the one hand, the higher the proportion of inside directors, the higher the company’s environmental and governance performance, while the higher the proportion of general experts in the board room, the lower the company’s governance performance. On the other hand, investor relations officers’ beliefs that corporate sustainability is primarily driven by investors’ ethical values appear negatively related to companies’ governance performance. In sum, corporate sustainability appears positively related to internal forces (inside directors) and negatively related to external forces (general expert directors and investor activist engagement). The results of this study demonstrate the need to carry out efforts to train BoDs (specifically inside directors) and IROs to respond to corporate sustainability and to take more of a leadership role in this area.

The role of audit committee attributes in corporate sustainability reporting: Evidence from banks in the Gulf Cooperation Council

Abstract: Purpose The purpose of this paper is to analyze the extent to which sustainability reporting by banks in the Gulf Cooperation Council (GCC) is affected by the attributes of audit committees. Design/methodology/approach The research is positivist and quantitative, based on a cross-sectional and time series analysis of 59 banks from 2013 to 2017. A multivariate model is used to investigate the impact of selected audit committee attributes (financial expertise, size, members’ independence and meeting frequency) on sustainability reporting. The model is built on agency, legitimacy, resources and stakeholders theories. Findings In contrast to the hypothesis, the authors report a negative association between financial expertise and sustainability reporting. Members’ independence and meeting frequency play a positive role in determining the extent of disclosure. The control variables (bank size, age and auditor type) are positively associated with corporate sustainability reporting. Research limitations/implications The main limitations of this study are related to the chosen attributes of audit committee and do not consider the board’s attributes. However, the authors believe these limitations do not affect the findings. Future research that includes more attributes when they became available will offer more insights into the role of audit committees on sustainability disclosure of financial institutions. Overcoming these limitations may make the results more generalizable. Practical implications The results of this study have important implications for regulators, bank management, investors and creditors. For regulators, in the countries of the GCC and in countries like them, the findings reveal the importance of disclosure requirements. The development of disclosure requirements is likely to improve corporate sustainability reporting and reduce variations in the extent of disclosure among banks. Banks could use these results to improve their reporting to outsiders. For creditors and investors, the study improves their awareness of the importance of corporate social responsibility, corporate governance and environmental information on credit and investment decisions and encourages banks to improve their disclosures of non-financial information. Originality/value This research makes a contribution to the scarce literature on sustainability reporting by banks, especially in an environment where capital markets lack active institutional investors, where regulators play the dominant role in determining the extent of disclosure and where banks are the main source of external finance for the corporate sector.

Leading corporate sustainability: The role of top management team composition for triple bottom line performance

Abstract: Sustainable development at the corporate level requires balancing social, environmental, and financial performance goals. Achieving such “triple bottom line” (TBL) performance is a very challenging task. In this study, we explore the role the organization's top management team (TMT) plays in leading their organization towards corporate sustainability. We focus on how two distinct aspects of the TMT's structural composition—the presence of a “chief sustainability officer” (CSO) and the TMT's functional diversity—affect the organization's ability to reach high levels of TBL performance. We follow the presence of 22 global energy companies in Corporate Knight's “Global 100” sustainability index for a period of 11 years and find that, surprisingly, the presence of a CSO does not boost TBL performance. However, we do find a positive effect for TMT functional diversity, suggesting that more diverse TMTs are better able to lead their organization to higher levels of TBL performance.

Internal corporate sustainability drivers: What evidence from family firms? A literature review and research agenda

Abstract: Despite the many studies on corporate sustainability, few have analyzed the specific case of the family business. Family firms have certain characteristics that make them different from nonfamily firms, making it valuable to analyze whether these peculiarities are also reflected in their attitude toward sustainability. Specifically, the determinants of the sustainability concept in family firms are unclear. Given the importance of family businesses in most economies, this paper will contribute to filling this gap, depicting through a literature review the main determinants that can affect the sustainability approach of the family firm. The systematic review was carried out through a documented process to guarantee its replicability. The findings show that drivers do not have a homogenous impact on sustainability initiatives due to the distinctiveness of these types of firms. This review contributes by systematizing the existing literature on such topics, identifying future research avenues, and providing several stimuli for researchers.

Social Movements as Catalysts for Corporate Social Innovation: Environmental Activism and the Adoption of Green Information Systems:

Abstract: Although the literature on social innovation has focused primarily on social enterprises, social innovation has long occurred within mainstream corporations. Drawing upon recent scholarship on soci...

Paradoxical tensions and corporate sustainability: A focus on circular economy business cases

Abstract: The paradoxical tensions in corporate sustainability is hotly debated in the literature. Some authors have underlined the need for empirical works in this field, and the circular economy could help to bridge this gap. The circular economy creates contrasting challenges for companies, which lead to paradoxical tensions. On the one hand, companies pursue circular economy goals—such as the use of recycled raw materials—thus highlighting their environmental commitment. On the other hand, such usage may affect the quality and consequently the competitiveness of products. Our study investigates the acknowledgement of these tensions and the strategies adopted by companies to manage them. Using a multiple case study approach, we focus on an Italian sample of three manufacturing sectors: paper production, textile/clothing, and leather. The results show the different defensive and proactive strategies adopted by firms highlighting, in one case, a relevant opportunity exploited by a company considered in the sample. Our paper contributes to the existing knowledge on paradoxical tensions management in companies involved in corporate sustainability inviting scholars towards new research avenues focused on circular economy.