Author: by Marco Taliento, Christian Favino and Antonio Netti
Summary:
Both UN Agenda 2030 and the Directive n. 2014/95/EU have recently promoted a marked improvement in sustainability disclosure, especially for larger companies or groups. Starting from this premise, we carried out an original study on the financial materiality of the E-S-G (environmental, social and governance) information of primary companies listed on major European indices in Belgium, France, Germany, Italy and Spain (BEL, CAC, DAX, FTSE-MIB, IBEX). Within the Stakeholder Theory and the Corporate Social Responsibility (CSR)“Corporate Social Perfomance (CSP) framework, our empirical analysis examined the impact of non-financial results (assessed through sustainability indicators) on economic (financial and market) performance in the timespan 2014“2017. We propose a different approach from previous studies, based on a PLS (Partial least squares)/SEM (Structural equation modeling) methodology together with the unprecedented consideration of œESG measures (Environmental, Social and Governance), either absolute (scores) or relative (extra-performance over industry sector). We find that, despite the absolute level of the individual ESG scores not being impactful, the œdistance from the industry average“normal figures (excess or abnormal ESG performance) is positively relevant, collaterally revisiting the notion of competitive advantage in sustainability terms. Corporate size is shown to be a significant background factor (as slack resources proxy). Social, environmental and governance responsibility (to all stakeholders) appear to be important as a competitive factor of the modern firm. View Full-Text
