ESG performance in the time of COVID-19 pandemic: cross-country evidence

Abstract

The purpose of this paper is to compare the performance of environmental, social, and governance (ESG) in developing and developed countries prior to and during the COVID-19 pandemic; the study also seeks to reveal the impact of the COVID-19 on the performance of ESG during the pandemic period. Based on a large international panel dataset of 12,325 company-year observations covering 2016–2021, panel regression analysis examined the study hypotheses and achieved the study objectives. The findings indicate that companies have taken precautions against the threats of the COVID-19 pandemic by ensuring compliance with ESG performance to prove their ethical behavior during a crisis. Our findings call into question the notion that companies in developed countries outperform companies in developing countries in terms of ESG performance. As a result, companies in emerging markets outperform companies in developed markets regarding environmental performance, while developed markets focus on social performance. Besides, the ESG performance is positively and significantly affected by the COVID-19, which indicates that during crises, it is important for companies to comply with ethical behavior and the most acceptable in societies. Also, the pandemic has a positive impact on both environmental and social performance, while it has a negative impact on governance performance alone. A considerable body of the literature has addressed the effect of the COVID-19 pandemic on various aspects of a company’s financial and non-financial practices. However, limited effort was given to ESG performance. The current study fills this gap by evaluating the direct effect of the COVID-19 crisis on the ESG performance in developing and developed countries. It also provides insight into the ESG performance and corporate behavior and obligations.

COVID‐19 impact, financial and ESG performance: Evidence from G20 countries

“…In addition, the pandemic has threatened companies' primary goal of maximizing shareholders' wealth, profitability, financial performance, and sustainability of its activities. Moreover, the COVID‐19 pandemic has put tremendous pressure on communities and stakeholders (Al Amosh & Khatib, 2023; He & Harris, 2020), increasing their need for voluntary actions and monitoring of companies' performance. Therefore, the pandemic may shed light on corporate behavior and performance and how much they influence financial and non‐financial goals.…”

Terrorist attacks and environmental social and governance performance: Evidence from cross‐country panel data

“…At the same time, terrorist attacks can pose a significant threat to an organization's legitimacy and the subsequent actions taken to maintain or restore it. During crises, organizations may face increased scrutiny and doubts about their ability to fulfill societal expectations and responsibilities (Bae et al, 2021; Al Amosh and Khatib, 2023). The occurrence of such an event can undermine the perceived legitimacy of an organization, as stakeholders question its ability to ensure security, protect stakeholders' interests, and contribute positively to society.…”

“…The occurrence of such an event can undermine the perceived legitimacy of an organization, as stakeholders question its ability to ensure security, protect stakeholders' interests, and contribute positively to society. To address these legitimacy challenges, organizations assess the importance of engaging in strategies to enhance ESG activities or reduce support according to expectations of stakeholder reaction (Al Amosh and Khatib, 2023). By demonstrating a commitment to environmental sustainability, social responsibility, and strong governance, organizations aim to regain the trust and confidence of stakeholders.…”

Paid attention but needed support: Environmental awareness of Indonesian MSMEs during pandemic

“…Workforce reductions in industries (other than pharmaceuticals) are also occurring globally around the world. (Al Amosh & Khatib, 2023; Brakman et al, 2021; Juranek et al, 2021; Radulescu et al, 2021). A decrease in operating income causes the business to suffer losses leading to employment termination to avoid larger losses.…”

“…Prior studies related to MSMEs in the Covid‐19 pandemic highlight the impact of the pandemic on the performance of MSMEs (Al Amosh & Khatib, 2023; Belitski et al, 2022; Bularafa & Adamu, 2021; Du et al, 2023; Sun et al, 2022) and the factors that cause MSMEs to survive in the pandemic era (Klein & Todesco, 2021; Patma et al, 2021). Other research related to MSMEs, the environment and the pandemic shows that awareness of the environment will cause MSMEs to be more resilient in the era of the Covid‐19 pandemic (Alraja et al, 2022; Wellalage et al, 2022; Zhang & Fang, 2022; Zulkiffli et al, 2022).…”