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Global gender diversity and equality indexes have been developed to promote gender diversity and equality at the country level, but it is difficult to see how those indexes are applied to organizations on a daily basis. The purpose of this study is to examine the application of environmental, social and governance (ESG) measures for gender diversity and equality at the organizational level in a Korean context.

Based on the institutional theory, the authors reviewed ESG measures for gender diversity and equality of women funds in four countries (USA, Canada, UK and Japan) and examined The Women Fund in Korea through document analysis and interviews.

ESG measures in four countries’ women funds mainly assessed the percentage of women in the workforce, on boards and in leadership positions. In The Women Fund, gender diversity indicators consider the ratio of female to male employees, while gender equality indicators take into account gaps of male and female salaries and positions. This study’s impact analysis indicates that the companies invested in by The Women Fund had higher return on assets and return on equity than those without the fund.

Although women funds explored in this study exemplify the use of ESG measures to apply global gender diversity and equality indexes at the organizational level, research is needed to examine ESG measures and women funds and their associations. Possible topics include what needs to be measured in ESG, who should be involved, how ESG measures should be applied, what outcomes of using ESG measures would ensue in organizations and how ESG measures relate to regional and global gender diversity.

In promoting ESG measures that apply global gender diversity and equality at the organizational level, human resource development practitioners, as change agents, can help organizations develop socially responsible and ethical behaviors and transform organizational culture, practice and systems, which may influence organizations’ long-term survival and development as well as financial performance.

As the government’s support and policies guide and drive firms to develop and implement initiatives and programs, the launch and implementation of gender diversity and equality at the organizational level in the form of women funds require a certain level of collaboration between the government and the private sector.

This study on the application of ESG measures for global gender diversity and equality at the organizational level in the form of women funds is timely to engage organizations in dialogue regarding what needs to be done to promote women’s participation and leadership roles in organizations in Korea and other countries.

Based on a sample of 1,872 firm-year observations for 573 global firms over the period 2013–2016, this study aims to provide empirical evidence on how environmental, social and governance (ESG) performance affects corporate creditworthiness as measured by credit default swap (CDS) spreads.

The authors use a regression model that accounts for country, industry and time-fixed effects as well as the instrumental-based Generalized Method of Moments (GMM) approach to dynamic panel modeling.

This study finds that improvements in ESG performance, especially in its governance pillar, reduce credit risk. Further, the authors uncover evidence suggesting the complementarity between ESG performance and country-level sustainability. The results indicate a stronger risk-mitigating impact of ESG performance in countries with higher sustainability scores.

In terms of practical implications, the findings suggest that corporations should strengthen governance frameworks and procedures to reduce credit risk, prior to embarking on environmental and social objectives. Further, the finding that country sustainability is an important determinant of CDS spreads suggests that country-level sustainability initiatives would not only help to preserve natural capital and promote social capital but also be beneficial to businesses and financial stability.

The study adds to the literature on the effects of ESG performance on credit risk by (1) utilizing a measure of ESG performance that considers the financial materiality of ESG issues across different industries; (2) utilizing a market-based measure of credit risk and CDS spreads; (3) examining the relative importance of ESG components to credit risk, rather than just the aggregate measure; and (4) assessing the influence of country sustainability on the relationship between ESG and credit risk.

This paper aims to investigate how a US firm’s political landscape affects the integration of environmental, social and governance (hereafter ESG) measures in CEO compensation contracts, thereby affecting the firm’s ESG performance and credit rating.

Based on the results of state senatorial and presidential elections and the location of a US firm’s headquarters, the authors categorize whether a firm has a political environment that is predominantly Democratic (blue) or Republican (red). The empirical analyses are based on a sample of US firms in the period 2014–2021.

The authors find that firms in blue states are more likely to link CEO compensation to ESG performance measures. Further, the results show that firms in blue states with ESG-linked compensation contracts have better ESG performance. Lastly, the authors find evidence that a firm’s ESG performance has a positive impact on its credit rating, but the impact is weakened if firms in red states link ESG performance to executive compensation.

To the best of the authors’ knowledge, this is the first research that explores how a firm’s political environment affects the use of ESG performance measures in CEO compensation contracts. Furthermore, the authors contribute to the literature by showing evidence that the political environment interacts with the impact of ESG-linked compensation incentives on the firm’s ESG performance and, thus, its credit rating.

The purpose of the paper is to examine the relationship between the Environmental, Social and Governance (ESG) performance of Real Estate Investment Trusts (REITs) and their operational efficiency and performance.

The authors use S&P Global (formerly SNL Real Estate) for the study analyses and examine all publicly traded REITs based in the United States over the 2019–2020 sample period. The authors regress the measures of REIT operational efficiency and operational performance on REIT ESG scores while controlling for REIT characteristics and use an ordinary least squares (OLS) estimation model with heteroscedasticity-robust standard errors. The authors also run additional regressions to examine the implications of operational efficiency on the relationship between ESG and operational performance.

The authors find that REITs that perform well on the ESG scale have higher operational efficiency. In addition, the authors find that REITs with better ESG scores are associated with better operational performance. Finally, the authors find that the positive association between ESG scores and operational performance is stronger in REITs with higher operational efficiency.

First, the adoption of ESG adds value to the REIT in terms of increased operational performance and efficiency. Second, the value addition of ESG to an REIT is driven by the better operational efficiency of some REITs over the others. Therefore, the authors’ findings suggest that REITs that currently score poorly on ESG performance would first need to focus on all the possible avenues to improve economies of scale and hence operational efficiency. This approach would help ensure that when those REITs adopt ESG initiatives, they get the most bang for their buck.

To the best of the authors’ knowledge, this is the first study that relates operational efficiency and operational performance of REITs to their ESG scores.

The purpose of this paper is to provoke a reflection on how sustainability may be measured to predict future performance to inform diverse stakeholders in their assessment of organizations.

Conceptual.

Propositions have been developed for considerations in elaborating future measures.

A rigorous examination of the pertinence of current sustainability measures and assumptions has been carried out to provide a foundation for the future development of forward-looking sustainability measures. Integration of stakeholder management capabilities and environmental, social and governance measures to support sustainable business development strategies.

The purpose of this study is to develop a method to assess social performance. Traditionally, environment, social and governance (ESG) rating providers use subjectively weighted arithmetic averages to combine a set of social performance (SP) indicators into one single rating. To overcome this problem, this study investigates the preconditions for a new methodology for rating the SP component of the ESG by applying machine learning (ML) and artificial intelligence (AI) anchored to social controversies.

This study proposes the use of a data-driven rating methodology that derives the relative importance of SP features from their contribution to the prediction of social controversies. The authors use the proposed methodology to solve the weighting problem with overall ESG ratings and further investigate whether prediction is possible.

The authors find that ML models are able to predict controversies with high predictive performance and validity. The findings indicate that the weighting problem with the ESG ratings can be addressed with a data-driven approach. The decisive prerequisite, however, for the proposed rating methodology is that social controversies are predicted by a broad set of SP indicators. The results also suggest that predictively valid ratings can be developed with this ML-based AI method.

This study offers practical solutions to ESG rating problems that have implications for investors, ESG raters and socially responsible investments.

The proposed ML-based AI method can help to achieve better ESG ratings, which will in turn help to improve SP, which has implications for organizations and societies through sustainable development.

To the best of the authors’ knowledge, this research is one of the first studies that offers a unique method to address the ESG rating problem and improve sustainability by focusing on SP indicators.

Environmental, social and governance (ESG) scores are becoming increasingly relevant in academic literature and the corporate world. This is partly because the themes covered by ESG scores are intended to resolve multiple major social and environmental issues. However, there is little consensus among academics about the definition of ESG scores and their measures. Many scholars have used ESG scores to represent various issues. The purpose of this study is to gather all definitions that were used by scholar when using ESG scores in their research.

This systematic literature review aims to identify how ESG scores are presented in the academic literature. A total of 4,145 articles were identified, of which 342 articles from influential peer-reviewed journals were retained.

In the articles, five different thematic definitions emerged in terms of how scholars have used ESG scores in their research: sustainability, corporate social responsibility, disclosure, finance and the analysis of ESG scores. Although some definitions are consistent with the methodologies of the agencies that produce ESG scores, others raise further questions. Caution is required when using ESG scores as a metric. They represent financial adjusted risk-return for some and are used to express business sustainability for others.

Only top-ranked journals were analyzed. In addition, only the key terms “ESG Score” and “ESG Scores” were used to gather all research papers.

Researchers could improve the accuracy of their results by developing specific methodologies that are closely related to the issues intended to be measured. The underlying variables composing the ESG scores could be used instead of the final score for more accurate environmental or social issues measurements.

This research shows that scholars use ESG scores to represent multiple issues that are not always captured by ESG scores’ official methodologies. ESG scores can express the overall performance of environmental and social issues, but they cannot be used to track specific underlying issues.

Purpose – The purpose of this study is to investigate whether a firm’s cost structure (specifically, its cost stickiness) is associated with environmental, social, and governance (ESG) sustainability factors of performance and disclosure.

Methodology/approach – This study uses MCSI Research KLD Stats (KLD) and Bloomberg databases for the 13-year period from 2003 to 2015 in constructing ESG performance and disclosure variables, respectively. The authors adopt the general cost stickiness models from Anderson, Banker, and Janakiraman (2003) and Banker, Basu, Byzalov, and Chen (2016) to perform the analysis.

Findings – The authors find that a firm’s level of cost stickiness is positively associated with certain sticky corporate social responsibility (CSR)/ESG activities (both overall and when separately classified as strengths or concerns) but not with other nonsticky CSR activities. The authors also show that the association between cost stickiness and ESG disclosure is incrementally stronger for firms with CSR activities classified as sticky. Furthermore, the authors provide evidence that ESG disclosure is greater when both cost stickiness and the degree of sticky CSR activities increase. The authors show that when cost stickiness is high and CSR activities are sticky, management has incentives to increase CSR/ESG sustainability disclosure to decrease information asymmetry.

Originality/value – The findings present new evidence to understand how management integrates cost management strategies with various dimensions of sustainability performance decisions and show that not all ESG activities are equally effective when it comes to cost stickiness. The authors also demonstrate that increased sustainability disclosure helps reduce information asymmetry incrementally more when both costs are sticky and CSR activities are sticky.

Although the integration of sustainability into business strategies and operations has received considerable scholarly attention, little is known about how sustainability initiatives across the extended value chain affect this integration. This study aims to analyze the impact of multinational corporations’ supply chain sustainability initiatives on their environmental, social and corporate governance (ESG) performance and the moderating role of the key country-level factors of the multinational’s headquarters.

This study analyzes data published by the top 201 multinationals among Fortune Global 500 companies over the period 2011–2021 on their attempts to integrate sustainability measures in extended supply chains and the resultant impact on their ESG scores. A fixed-effect model is used in the primary empirical study.

Results indicate that managerial interventions through a more robust supply chain policy framework, monitoring mechanisms, corrective actions and training initiatives lead to better ESG-environment pillar performance for multinationals. Additionally, the ESG-environment pillar performance is influenced by the socioeconomic model and country-level ESG risks of the nation where the multinational is headquartered.

The implications of this study are vital for understanding the criticality of sustainability initiatives in the supply chain for a firm’s overall ESG performance. To attain better levels of sustainable performance, multinationals must assume a stewardship position and deploy sustainability initiatives in their extended supply chain.

Over the past two decades, the topics of Environmental, Social and Corporate Governance (ESG) and Corporate Social Responsibility (CSR) have attracted an increasing amount of interest, reflecting a growing sensitivity of investors and corporations towards environmental, social and governance issues.

This survey offers an overview of the academic literature on ESG/CSR through the lens of investors, institutions and firms. We first discuss the definitions of ESG and CSR and their relationship to each other.

We next describe how ESG is measured and note problems with the measurement of and quality of ESG data and discrepancies between different measures of ESG. We then turn our attention to investors, examining what types of investors invest in ESG and the role of institutional investors in ESG. From the firm's perspective, we discuss why firms themselves conduct ESG. We also summarize the literature on the impact of ESG on firms: how ESG affects firms' financing, disclosure and reporting activities and firm performance. Finally, we describe other consequences of the focus of ESG and CSR on firms and investors.

This survey offers an overview of the academic literature on ESG/CSR through the lens of investors, institutions and firms.