Does withdrawal from/remaining in an aggressor country affect companies’ ESG ratings? Case study of the Russia-Ukraine war

Dincă, Marius Sorin; Vezeteu, Cosmin-Dănuț; Dincă, Dragoș

doi:10.3389/fenvs.2023.1225084

Cited by 2 publications

(1 citation statement)

References 28 publications

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“…It is logical to assume that a socially responsible reaction from companies to the russian invasion is much more likely if it leads to higher ESG and Social ratings. However, Dincă et al (2023) examined how the choice between the withdrawal strategy and continuing business-as-usual affects Morningstar Sustainalytics ESG Risk Rating and found no significant difference. These findings aligne with previous publications questioning the methodology of influential ESG rating providers in terms of the timeliness and completeness of assessing the risks of companies with doubtful http://dx.doi.org/10.21511/bbs.19 (1).2024.12 social performance.…”

Section: Literature Reviewmentioning

confidence: 99%

Factors influencing the multinational banks’ decisions to curtail operations in russia: Does ESG matter?

Rohov,

Kolodiziev,

Yehorycheva

et al. 2024

Banks and Bank Systems

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The paper is devoted to an under-researched topic of the international business community’s reaction to russia’s armed aggression against Ukraine. It aims to evaluate how G7 and EU financial sanctions, institutional pressure, ESG ratings, and asset value of multinational banks in russia influence their decisions to reduce activities in the invading country. The study used the Yale CELI database of companies leaving and staying in Russia for the classification tree method. The results show that none of the banks headquartered in G7 and EU member states that had no or relatively little assets in russia before the invasion are doing business there on a pre-war scale. Unlike banks headquartered in other countries, most either curtailed their presence in that market or exited the market. This indicates that financial sanctions imposed by G7 and EU member states and institutional pressure on banks in these countries to withdraw from the russian market have proven effective to a certain extent. However, these factors do not meaningfully influence the business of multinational banks with significant assets in russia. The study has not confirmed the hypothesis that a bank with higher ESG ratings is more likely to curtail its operations in the market of an aggressor country and withdraw. However, nearly all banks that scaled back significant activities or even pulled out of russia have better ESG indicators than the industry average. The results suggest the feasibility of improving the methodologies of ESG rating providers for accurately measuring business reactions to aggression and war crimes.

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Section: Literature Reviewmentioning

confidence: 99%

Factors influencing the multinational banks’ decisions to curtail operations in russia: Does ESG matter?

Rohov,

Kolodiziev,

Yehorycheva

et al. 2024

Banks and Bank Systems

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ESG Risks and Financial Performance. Analysis of Romanian-Listed Companies

Vezeteu,

Stănciulescu

2024

Proceedings of the International Conference on Business Excellence

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The term “sustainability” is often used interchangeably with the acronym ESG (Environmental, Social, Governance). This happens as investors trust ESG scores to provide an accurate measurement of a company's sustainability performance. The traditional approach for evaluating sustainability performance involves analysing the scores for a given company, for each of the 3 ESG pillars: Environmental, Social and Corporate Governance. Moreover, most studies show that these scores are positively correlated with financial performance. While this approach is rather straightforward, usually it is not exhaustive and fails to capture the risks behind a company's exposure to material ESG issues and its management. Therefore, this study proposes an approach based on material ESG risk, exposure and management scores. Particularly, this paper focuses on the sector-wide analysis of ESG risk scores and their correlation with financial performance, for Romanian-listed companies, using the most recent data from one of the largest ESG rating provider. The methods employed are data analysis & visualization and correlation analysis. The results reveal, on average, a year-on-year decrease of the ESG Risk Score for the selected companies, along with increased exposure to material ESG risks, yet better management of these risks. Interestingly, the results do not show a significant correlation between the selected ESG variables and financial performance, measured by ROE, ROA and Tobin's Q, though a significant positive correlation between the Exposure and Management scores and firm size, measured by Market Cap, is found. Although there are limitations to this paper, for example, related to sample size or timeframe, it provides valuable insights on both the sustainability performance of Romanian-listed companies and, more broadly, its relationship with financial performance from a regional perspective.

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Does withdrawal from/remaining in an aggressor country affect companies’ ESG ratings? Case study of the Russia-Ukraine war

Cited by 2 publications

References 28 publications

Factors influencing the multinational banks’ decisions to curtail operations in russia: Does ESG matter?

Factors influencing the multinational banks’ decisions to curtail operations in russia: Does ESG matter?

ESG Risks and Financial Performance. Analysis of Romanian-Listed Companies

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