Guest editorial: A short review of the role of ESG activities in business and research

Agapova, Anna; Garanina, Tatiana

doi:10.1108/mf-01-2024-644

2024

DOI: 10.1108/mf-01-2024-644

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Guest editorial: A short review of the role of ESG activities in business and research

Anna Agapova,

Tatiana Garanina

Abstract: Involvement in environmental, social and governance (ESG) activities [also often called corporate social responsibility (CSR)] has become important in making investment decisions in financial markets (Christensen et al., 2022). In line with the stakeholder and legitimacy theories, involvement in ESG practices may improve a company's value creation (Gregory

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Reconsidering the impact of environmental, social and governance practices on firm profitability

Agnese,

Carè,

Cerciello

et al. 2024

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PurposeThis paper investigates the relationship between commitment to ESG practices and firm performance using a synthetic index based on ESG disclosure and ESG performance scores.Design/methodology/approachUsing the Mazziotta-Pareto aggregation method, we develop a novel synthetic index of ESG engagement based on ESG rating and disclosure. This index is employed in a dynamic panel regression, implemented using the Arellano-Bond estimator, to explain profitability in a sample of 146 listed Canadian firms over the period spanning from 2014 to 2021.FindingsESG practices may either foster or hinder firm performance. In particular, a synergy emerges between the social and environmental dimensions of ESG practices, shedding light on the relevance of high standards in terms of environmental and social activities.Practical implicationsThe study emphasizes the significance of acknowledging the various facets of ESG engagement and the necessity of transcending the current constraints of accessible ESG data and ratings. Synthetic indices combining different types of ESG information may contribute to mitigating the problems created by strategic disclosure on the part of firms, which typically results in undesirable practices such as greenwashing and social washing.Originality/valueThis is the first study that applies the Mazziotta-Pareto method to develop a synthetic index of ESG engagement, tackling each pillar separately. Moreover, when investigating the effect of ESG engagement on profitability, we allow for cross-pillar synergies and/or trade-offs.

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Reconsidering the impact of environmental, social and governance practices on firm profitability

Agnese,

Carè,

Cerciello

et al. 2024

View full text Add to dashboard Cite

show abstract

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Guest editorial: A short review of the role of ESG activities in business and research

Cited by 1 publication

References 45 publications

Reconsidering the impact of environmental, social and governance practices on firm profitability

Reconsidering the impact of environmental, social and governance practices on firm profitability

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