The Influence of Firm Size on the ESG Score: Corporate Sustainability Ratings Under Review

Drempetic, Samuel; Klein, Christian; Zwergel, Bernhard

doi:10.1007/s10551-019-04164-1

Cited by 794 publications

(414 citation statements)

References 124 publications

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“…One possible explanation for this finding is the methodology used to compile ESG scores. Companies' ratings are, to a greater or lesser extent, influenced by the data available to SRAs such that firms can improve their scores on certain attributes simply by disclosing more or better quality information (Doyle 2018;Drempetic et al 2019). Enhancing disclosures is also far less costly, time consuming and disruptive than making substantive changes in ESG-related organisational practices.…”

Section: Discussionmentioning

confidence: 99%

“…Yet ratings have also attracted considerable criticism. One set of critiques have focused on the underlying data quality (Doyle 2018;Drempetic et al 2019). Others have questioned the validity of ESG ratings, with studies documenting non-trivial differences in the way that different SRAs conceptualise E, S and G, and the weights used to compile scores (Chatterji et al 2016;Semenova and Hassel 2015).…”

Section: A Primer On Esg Ratingsmentioning

confidence: 99%

“…They will also be able to invest more in changes to policy, practice and performance attributes measured by SRAs. Within the literature, the greater availability of "slack resources" has been used to explain why larger firms engage in more CSR practices (Campbell 2007), and disclose more ESG-related information (Tamimi and Sebastianelli 2017;Drempetic et al 2019). As such, it is plausible to suggest that conformity to ESG ratings may be underpinned by superior corporate resources, and resistance a product of inadequate resources.…”

Section: Understanding Heterogeneitymentioning

confidence: 99%

“…An increasing number of companies are being evaluated by entities known as sustainability rating agencies (referred to hereafter as SRAs or rating agencies) (Busch et al 2016;Drempetic et al 2019). The ratings they produce are primarily intended to provide stakeholders with data on various environment, social and governance (ESG) indicators.…”

Section: Introductionmentioning

confidence: 99%

“…This is important for scrutinising claims about the substantive contribution of informationbased governance to CSR, and whether such approaches give rise to substantive or symbolic change (Depoers et al 2016;Kim and Lyon 2011). A better understanding of corporate responses is also important because it sheds light on the sustainability implications of the growing amounts of capital which, to a greater or lesser degree, is being invested taking account of ESG-related factors (Amel-Zadeh and Serafeim 2018;Drempetic et al 2019).…”

Section: Introductionmentioning

confidence: 99%

See 4 more Smart Citations

How Do Companies Respond to Environmental, Social and Governance (ESG) ratings? Evidence from Italy

2020

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While a growing number of firms are being evaluated on environment, social and governance (ESG) criteria by sustainability rating agencies (SRAs), comparatively little is known about companies' responses. Drawing on semi-structured interviews with companies operating in Italy, the present paper seeks to narrow this gap in current understanding by examining how firms react to ESG ratings, and the factors influencing their response. Unique to the literature, we show that firms may react very differently to being rated, with our analysis yielding a fourfold typology of corporate responses. The typology captures conformity and resistance to ratings across two dimensions of firm behaviour. We furthermore show that corporate responses depend on managers' beliefs regarding the material benefits of adjusting to and scoring well on ESG ratings and their alignment with corporate strategy. In doing so, we challenge the idea that organisational ratings homogenise organisations and draw attention to the agency underlying corporate responses. Our findings also contribute to debates about the impact of ESG ratings, calling into question claims about their positive influence on companies' sustainability performance. We conclude by discussing the wider empirical, theoretical and ethical implications of our paper.

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Section: Discussionmentioning

confidence: 99%

Section: A Primer On Esg Ratingsmentioning

confidence: 99%

Section: Understanding Heterogeneitymentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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How Do Companies Respond to Environmental, Social and Governance (ESG) ratings? Evidence from Italy

2020

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Role of environmental, social and governance disclosure in business profitability and cost of debt: An analysis of small Southern Italian agri‐food businesses

Brunella,

Federico,

Roberto

et al. 2024

Agribusiness

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This article investigates the environmental, social, and governance (ESG) commitment of small agri‐food businesses disclosed by 279 Italians using Thomson Reuters Eikon ESG indicators and its relationship with their financial dimensions, that is, the corporate profitability indexes (ROE and EBITDA) and cost of debt, used as a proxy of the ability to access credit. Findings showed the absence of social reporting and the disclosure of business governance, including sustainability strategy, and the poor reporting of the environmental and social pillars, except for product innovation, product quality, and responsible marketing themes. The capability of ESG disclosure to predict corporate profitability and access to credit is limited. Moreover, investments in product responsibility are negatively related to the cost of debt, while commitment toward the internal and external companies' community appears to predict their ability to access credit positively. In light of the new institutional pressures requiring small agri‐food businesses to change and combine intrinsic and extrinsic motivation for CSR, the study extends the literature on the sustainability of small agri‐food businesses, which is mostly limited, and provides significant practical and political contributions to foster the paradigm shift toward sustainability [EconLit Citations: M21, Q01, Q13].

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Influence of financial resources on sustainability performance of SMEs in emerging economy: The role of managerial and firm level attributes

Khattak,

Wu,

Ahmad

2023

Bus Strat Dev

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This research investigates whether managerial level attributes (age, education, and experience) and firm level attributes (size and age) influence the role of financial resources (FR) on sustainability performance in small and medium enterprises (SMEs) in emerging economies. To test the model, the analyses were performed through SmartPLS based on 611 Pakistani SMEs. The results of the structural equation modeling indicate that the positive relationship between FR and sustainability performance is significantly strengthened by managerial attributes (manager experience and education) and firm level attributes (firm size). However, manager age and firm age do not moderate the nexus between FR and sustainability performance. This research recommends SMEs to focus on experienced and educated managers as compared to older ones to utilize their FR efficiently in sustainable activities. This research enriches the resource base view and upper echelon literature through empirical evidence. Further implications for policymakers and businesses are discussed.

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The Influence of Firm Size on the ESG Score: Corporate Sustainability Ratings Under Review

Cited by 794 publications

References 124 publications

How Do Companies Respond to Environmental, Social and Governance (ESG) ratings? Evidence from Italy

How Do Companies Respond to Environmental, Social and Governance (ESG) ratings? Evidence from Italy

Role of environmental, social and governance disclosure in business profitability and cost of debt: An analysis of small Southern Italian agri‐food businesses

Influence of financial resources on sustainability performance of SMEs in emerging economy: The role of managerial and firm level attributes

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