The Environmental, Social, Governance, and Financial Performance Effects on Companies that Adopt the  United Nations Global Compact

Ortas, Eduardo; Álvarez, Igor; Erro, Ainhoa Garayar

doi:10.3390/su7021932

Cited by 102 publications

(87 citation statements)

References 73 publications

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“…In this sense, the potential benefits of CSR have been associated in the literature with developing an appropriate relation with the different stakeholders [12,[24][25][26][27].…”

Section: Literature Reviewmentioning

confidence: 99%

Financial Performance of Socially Responsible Firms: The Short- and Long-Term Impact

2017

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Abstract:The pressure of society for firms to adopt socially responsible behavior is evident. Yet, Corporate Social Responsibility (CSR) needs an economic justification. In response to this, there exists a comprehensive literature that analyzes the possible relation between social and business financial performance. During the last decade, the literature has been heading toward the carrying out of dynamic studies as researches find that the relationship between social and financial performance is not static. The purpose of this work is to analyze the relevance for the financial performance of Spanish listed firms of maintaining their responsible behavior. To do so, we carry out a comparison between two analyses-one cross-sectional, and the other longitudinal-to be able to conclude whether or not adopting responsible criteria makes a difference in business financial performance in the short and long-term. Some of the results obtained in the cross-sectional study are consolidated in the long-term study. In this sense, responsible firms exhibit a higher systematic risk and have greater size. As a conclusion, be responsible does not mean less stock profitability or a lower business result. It certainly contributes to firms continuing to voluntarily incorporate good corporate social responsibility practices into their business models. What is more, these results support the governmental policies and initiatives that bolster corporate social responsibility.

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“…In this sense, the potential benefits of CSR have been associated in the literature with developing an appropriate relation with the different stakeholders [12,[24][25][26][27].…”

Section: Literature Reviewmentioning

confidence: 99%

Financial Performance of Socially Responsible Firms: The Short- and Long-Term Impact

2017

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“…Most mainstream studies have used stakeholder theory when addressing firms' incentives to engage with CSR-related practices and to understand differences in CSP between organizations [35]. Stakeholder theory [36] argues that companies should guarantee the protection of the interest of all the firms' stakeholders, arguing that companies are open systems that affect and can be affected by other agents outside and inside them.…”

Section: Theoretical Backgroundmentioning

confidence: 99%

Firms’ Board Independence and Corporate Social Performance: A Meta-Analysis

Ortas

Álvarez

Zubeltzu³

2017

Sustainability

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This paper investigates the influence of organizations' board independence on corporate social performance (CSP) using a meta-analytic approach. A sample of 87 published papers is used to identify a set of underlying moderating effects in that relationship. Specifically, differences in the system of corporate governance, CSP measurement models and market conditions have been considered as moderating variables. The results show that the independence of a company's board positively influences CSP. This is because companies with more independent directors in their boards are more likely to commit to stakeholder engagement, environmental preservation and community well-being. Interestingly, the results also show that the positive connection between board independence and CSP is stronger in civil law countries and when CSP is measured by self-reporting data. Finally, the strength of the influence of the independence of a firm's board on CSP varies significantly in different market conditions. The paper concludes by presenting the main implications for academics, practitioners and policy makers.

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“…Ortas et al [7] claim that firms that adopt environmental, social, and governance (ESG) principles require an organizational change that fosters stakeholder engagement which, in turn, contributes towards the firm's development through financial and non-financial incentives. Ferreri-Ferrero et al [8] highlight the generation of consistent competitive advantage in the ESG dimensions providing an intangible value that enhances firms' corporate financial performance.…”

Section: Relevant Literature and Hypothesis Developmentmentioning

confidence: 99%

“…Prior research qualitatively analyzes consumers' attitudes and behaviors toward firm's corporate social behaviors [4,5]. Many studies emphasize the several theoretical linkages of social and environmental efforts to enhance firms' performance and examine the effects on firm's profitability and market value [3,[6][7][8]. The financial performance of a firm largely depends on its sales, which ultimately reflects the consumers' response.…”

Section: Measurement Of Consumers' Responsementioning

confidence: 99%

“…Academia has indicated an increasing interest in the sustainable development of firms, which has produced several studies that investigate the effects of corporate environmental efforts. While examining the economic repercussions of corporate environmental efforts, focus has been limited to the evaluation of either consumers' responses or stockholders' expectations of corporate social activities [3][4][5][6][7][8][9]. Consumers' and stockholders' perceptions of an environmental strategy may vary greatly depending on their behavior, attitude, trust, exposure, and so on, and as such, it may yield inconsistent results [10,11].…”

Section: Introductionmentioning

confidence: 99%

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Manager’s Dilemma: Stockholders’ and Consumers’ Responses to Corporate Environmental Efforts

2017

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Abstract:This study aims to reveal that different stakeholders have different environmental preferences by demonstrating the managers' dilemma of selecting an appropriate environmental strategy to achieve firms' corporate goals. It analyzes the effects of firms' efforts in environmental impact through actual environmental practices and environmental considerations in environmental management on stockholders' and consumers' responses by using the Newsweek Green Rankings 2012 for large US-based firms. The study uses the event study methodology and the ordinary least squares multivariate regression model conditioned with relevant firm and industry-specific characteristics. The results indicate that both stockholders and consumers appreciate corporate efforts in reducing environmental damage; however, consumers exhibit a significant and negative response against firms' environmental management efforts. The conflicting results provide valuable insights into the alignment of environmental efforts for developing core competencies that lead firms toward sustainability. Further, this research makes a valuable contribution to the existing literature and provides guidelines for the formulation of public policies that encourage corporate environmental efforts to ensure simultaneous development of business and society.

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The Environmental, Social, Governance, and Financial Performance Effects on Companies that Adopt the United Nations Global Compact

Cited by 102 publications

References 73 publications

Financial Performance of Socially Responsible Firms: The Short- and Long-Term Impact

Financial Performance of Socially Responsible Firms: The Short- and Long-Term Impact

Firms’ Board Independence and Corporate Social Performance: A Meta-Analysis

Manager’s Dilemma: Stockholders’ and Consumers’ Responses to Corporate Environmental Efforts

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