Carrot and Stick? The Role of Financial Market Intermediaries in Corporate Social Performance

Slager, Rieneke; Chapple, W

doi:10.1177/0007650315575291

Cited by 35 publications

(38 citation statements)

References 70 publications

(163 reference statements)

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“…The first is to provide novel insights into how firms respond to being rated. Previous work on ESG ratings has tended to narrowly frame the range of possible responses, for example, in terms of the degree to which firms "improve" their environmental or social performance following evaluation (Chatterji and Toffel 2010;Slager and Chapple 2016). Answering calls for more disaggregated analyses in studies of organisational ratings (Szper 2013), our inquiry reveals a more diverse set of responses to ratings.…”

Section: Introductionmentioning

confidence: 87%

“…by excluding them). Supporting these ideas, Slager and Chapple's (2016) statistical analysis finds that firms facing exclusion from the FTSE4Good Index following the introduction of new criteria were more likely to improve their performance in the following year, as were firms which actively advertised the fact that they were part of the Index. Chatterji and Toffel (2010) take a wider perspective, providing large sample evidence that US firms which received low scores on environmental ratings improved their performance (as measured by corporatewide toxic pollution) more than their peers never rated or that received a more positive evaluation.…”

Section: Previous Work On Corporate Responses To Esg Ratingsmentioning

confidence: 94%

“…The underlying idea is that poor ratings attract negative attention from external stakeholders, who exert pressure on corporations to improve their performance. Internally, too, firms may take measures to conform to ratings, aware of the potentially damaging consequences of a low score (Chatterji and Toffel 2010;Slager and Chapple 2016). Active responses aimed at positively adjusting to ratings and improving ESG evaluations might therefore be greater for corporations with relatively poor scores and/ or overall rank.…”

Section: Understanding Heterogeneitymentioning

confidence: 99%

See 2 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: Introductionmentioning

confidence: 87%

Section: Previous Work On Corporate Responses To Esg Ratingsmentioning

confidence: 94%

Section: Understanding Heterogeneitymentioning

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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“…For example, in the early 2000s, when the relationship between KLD's activity and the stakeholder model of the corporation became clearer, KLD reorganized its assessment criteria (Gond & Avetisyan, 2016); it renamed some general categories to give them a stakeholder-model flavor in order to communicate its intentions in a better way, such as renaming 'Non-US Operations' to 'Human 'Civil Society' to 'Community Involvement'. Finally, both the FTSE4Good Index series (by Eiris) and the DJSI (by SAM Group) have added assessment criteria for issues such as climate change and supply chain standards in the last decade (Slager & Chapple, 2015).…”

Section: Situating Csr Rating Agencies As Supra-individual Actors Witmentioning

confidence: 99%

A framework to study strategizing activities at the field level: The example of CSR rating agencies

Elbasha

Avetisyan

2018

European Management Journal

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This paper responds to recent calls to bridge strategy and organization research by combining Strategy-as-Practice and Neo-Institutional Theory through re-theorizing the notion of strategic actor. We problematize the notion of strategic actor at the field level, and rely on insights from management and organization studies and sociology to advance a theoretical framework that conceptualizes organizations as social actors at the field level. We demonstrate our theoretical framework by drawing on corporate social responsibility rating agencies. We see corporate social responsibility rating agencies as supra-individual, social actors that are predisposed to assume an active role in defining and revisiting structural parameters within the society through their purposeful, meaningful actions and interactions. Our main contribution is to the development of the Strategy-as-Practice literature, achieved by re-theorizing the notion of strategic actor at the field level. This contribution responds to the micro-isolationism critique, and proposes a new focus for Strategy-as Practice research.

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“…For the financial stakeholder of firms and the health care system have been a source of considerable confusion the fact that ESG risk of health care systems and hospitals itself is interpreted differently in different types of financial institutions [7] [8]. Commercial banks are primarily concerned with environmental or social and governance (ESG) factors of hospitals affecting the borrower's creditworthiness and avoiding additional ESG costs.…”

Section: Introductionmentioning

confidence: 99%

Sustainable Finance in Sustainable Health Care System

Sepetis¹

2020

OJBM

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Nowadays the WHO and the EU health care system is influenced by Sustainable Development Goals. The implementation of public or voluntarily environmental, social and corporate governance (ESG) policies in hospitals causes extra costs and revenue to the health care system. The financial risk of sustainable hospitals and of the sustainable health care system, as well as the capabilities and the suggestions for the best possible financial analysis assessment, consist a new research field. This paper will investigate this new research field of sustainable health care and sustainable finance and will add scientific knowledge and methodological implementation to financial assessment analysis tools to those entities responsible for the implementation of sustainable health care system policies and the capital market investors, in order to take the best possible decisions.

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Carrot and Stick? The Role of Financial Market Intermediaries in Corporate Social Performance

Abstract: Acknowledgments (if applicable):This research was funded by the ESRC Case studentship scheme. We would like to express our gratitude to the FTSE-RI team for their support throughout this research project. Biographical Details (if applicable):

Cited by 35 publications

References 70 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

A framework to study strategizing activities at the field level: The example of CSR rating agencies

Sustainable Finance in Sustainable Health Care System

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