Analysis of corporate sustainability performance and corporate financial performance causal linkage in the Indian context

When Does Corporate Sustainability Performance Pay off? The Impact of Country-Level Sustainability Performance

Purpose In the context of global economic downturn and intense competition, firms are increasingly resorting to supply chains to acquire capital support and achieve sustainability. This study aims to investigate the effect of supply chain finance (SCF) on corporate sustainability performance (CSP) and identifies SCF-related recipes for CSP. Design/methodology/approach Based on a sample of 1,038 firms that disclose CSP – namely, corporate financial performance (CFP) and environmental, social and governance performance (ESGP) – the authors use a quasi-replication method consisting of empirical analysis with fuzzy-set qualitative comparative analysis (fsQCA) to investigate SCF’s effects on CSP. Findings The authors find that SCF has a “doing well by doing good” effect on CSP. CFP can promote the positive effect of SCF and ESGP while ESGP’s positive effect on SCF and CFP is nonsignificant. In addition, heterogeneity tests show that SCF’s promoting effect on CSP is affected by high-low CFP and ESGP. The fsQCA results verify the empirical findings and reveal five SCF-related recipes for achieving high CSP. Research limitations/implications This study has the following two limitations. First, we do not consider how SCF affects CSP in different industries. There is a need to investigate whether industry heterogeneity changes SCF’s effects on CSP, especially in prominent industries, such as the energy industry, with its high susceptibility to ESGP, and the manufacturing industry, with its extensive application of SCF. It will be important to investigate these industries to better understand SCF’s role in sustainability. Second, we study the secondary supply chain – namely, core firm–suppliers and core firm–customers. The authors do not consider financial institutions (e.g. banks and guarantee institutions). SCF modes that include the participation of financial institutions, such as factoring financing and reverse factoring financing, cater more to the capital needs of diversified firms. In the future, studying specific industries that have made significant contributions to the application of SCF along with others that are more sensitive to environmental governance could better highlight the effect of SCF on sustainability and help supply chain managers understand the application value of SCF. Future research could also extend SCF participants into multiple roles to explore separate effects. Tracking financing demanders, fund providers and credit guarantors could capture SCF characteristics more comprehensively. Methodologically, it will be challenging to accurately measure SCF networks in terms of quantification. In future work, this could be performed with the help of artificial intelligence. Practical implications First, our findings indicate that SCF has a “doing well by doing good” effect on core firms. SCF can not only overcome the capital shortage of SMEs but also provide significant benefits to core firms. Second, our findings provide SCF-related recipes to help firms fulfil ESGP obligations without sacrificing CFP under the pressure to “do good.” The authors provide valuable insights and diverse recommendations to help supply chain managers, marketing executives and researchers adjust supply chain management strategies. Third, this work can guide executives in various fields to adopt SCF to achieve sustainability as a risk-mitigation strategy by means of marketing. Originality/value This study identifies better, more straightforward SCF-related recipes for CSP (consisting of CFP and ESGP) using a quasi-replication analysis that improves upon conventional methods such as regression analysis, which have limited power. The authors provide valuable insights and diverse recommendations to help managers pursue sustainable development. The findings point to practical guidelines and feasible solutions that can support well-founded operational strategic and management decision-making, which can enhance a firm’s competitiveness under uncertainty and a sluggish economy.

The aim of this paper is to find an answer to a question that has received extended attention in prior literature, but for which evidence provided has not yet reached a single unanimous consent: is there an association between companies’ corporate sustainability performance (CSP), as measured by inclusion in Dow Jones Sustainability Index Europe (DJSI Europe), and their corporate financial performance, proxied by return on assets (ROA) and return on equity (ROE)? The paper adopts pooled ordinary least square (OLS) regression models, as well as fixed effects (FE) panel data models to focus on the association between CFP and CSP in a crosscountry analysis based on European companies. The application of OLS models reveals a significantly strong positive impact of high CSP on CFP, when proxied by ROA and a neutral relation when measured by ROE. Under the FE models, the coefficient for CSP is statistically insignificant when CFP is measured by ROA. A negative relation is found when CFP is measured by ROE and CSP is proxied by a measure that assesses inclusion in DJSI Europe on an annual basis. When the analysis is taken a step further, to include temporal consistency in the construction of the CSP, the sign of the association changes - for ROE, or becomes significantly positive - for ROA. Our analysis therefore suggests that when simultaneity biases are included in the model, and once temporal effects are controlled for, CSP and CFP are positively related, when CFP is measured by either ROA or ROE. Overall, the findings suggest that the CSP – CFP relation is sensitive to firm specific heterogeneity, and the choice of proxy for each of the two types of performance.

In this research, we empirically investigate the impact of the board's female representation on corporate financial and sustainability performance after the introduction of the minimum gender quotas in Italy in 2011 (Golfo‐Mosca Law). We studied the 40 companies of the FTSE‐MIB index for 3 years 2016–2018. Using yearly regression analysis, pooled analysis, and differential analysis, we find that the female involvement on both boards has almost no significant effect on the financial performance; however, a significant association is found with the corporate sustainability performance. The robustness checks using differential analysis confirm the later relationship in which firms that improved female representation had also an ethical score upgrade. Interestingly, we also provide that there is an optimal level of gender quotas that maximizes sustainability performance and beyond that, a negative impact on performance might be detected.

This paper examines the relationship between turnover among chief executive officers (CEOs) and corporate sustainability performance (CSP) by identifying the influence of two major types of succession to the top job (internal or external promotion) and the reasons for change. Our model also integrates the firm’s past prioritization of CSP and the impact of a company’s participation in the Global Reporting Initiative (GRI). Upper echelons theory and agency theory frameworks are adopted to understand CSP. Using an analysis of panel data for 88 public companies across 13 years in France, we find that a change of chief executive has a positive and significant effect on CSP 5 years after the change. This positive effect is stronger when the new CEO is recruited from outside the firm. The impact on CSP is invariably positive and significant, except for voluntary departures. The arrival of a new CEO affects CSP less when the firm has already achieved a high standard of CSP and participates in the GRI. These results are obtained after controlling CSP determinants already validated in the literature (financial performance, size, profitability, etc.). The findings show that expectations of CEOs are not solely economic and financial but also concern CSP. In terms of governance, they should prompt shareholders looking to strengthen CSP to choose new CEOs from outside the firm and to encourage the firm to participate in the GRI.

PurposeThis paper analyzes the connection between the sustainability performance of Chinese banks and their financial indicators to explore whether sustainability regulations can be implemented without decreasing the financial performance of the banking sector.Design/methodology/approachThe study examined reports and websites of Chinese banks, categorized different corporate sustainability aspects and conducted panel regression and Granger causality to analyze cause and effect variables.FindingsThe environmental and social performance of Chinese banks increased significantly between 2009 and 2013. Furthermore, a bi-directional causality between financial performance and sustainability performance of Chinese banks has been found. Based on institutional theory, this interaction may be influenced by the Chinese Green Credit Policy.Research limitations/implicationsThe findings suggest that corporate sustainability performance and financial performance are not a trade-off but correlate positively. Further research is needed to analyze the effect of financial regulations, such as the Chinese Green Credit Policy.Practical implicationsAccording to the good management theory by Waddock and Graves (1997) that claims a positive impact of corporate social performance on financial performance, Chinese banks can invest in corporate sustainability to increase their financial success and re-invest parts of the additional returns – also called slack resources – in sustainability activities.Social implicationsChinese banks are able to influence the economy to become greener and less polluting without sacrificing financial returns.Originality/valueThis is the first study to explore the sustainability performance of Chinese banks, including their products and services.

The study examined the implications of the recent pandemic on the corporate governance, remuneration and corporate sustainability performance of South African listed companies. Data from 42 companies was analyzed using the panel fully modified ordinary least squares (FMOLS) and dynamic ordinary least squares (DOLS) methods from 2010-2021. Findings revealed that the pandemic negatively impacted the selected companies. This study revealed that the pandemic had a good impact on some companies and not just bad ones as claimed by previous researchers. Results from COVID -19- related expenses, debt-to-equity ratios and staff costs revealed a negative but significant result in the estimated model. Other variables such as current ratios, net profit margins and board diversity revealed a positive and significant relationship with all the dependent variables. Hence, a very severe implication of the pandemic on the performance of companies is confirmed through COVID -19related expenses, staff costs and directors’ remuneration. These have a very strong negative impact on the future performance, survival, and sustainability of the selected companies. Lastly, a strong relationship between corporate governance and corporate sustainability performance was confirmed as shown by ROA, board size, directors’ remunerations and board diversity. This study provides insight for stakeholders such as governments, directors and policymakers to develop both preventive and proactive policies to protect and guide companies from future similar pandemics. To avert and prevent future negative implications on companies, this study recommends a well- structured scheme for all of the company’s staff, cash reserves and IT governance.

Antecedents of corporate sustainability performance in Turkey: The effects of ownership structure and board attributes on non-financial companies

In this paper the relationship between corporate sustainability performance and corporate financial performance is researched. It is hypothesized that a better sustainability performance of firms leads to financial success in terms of increased EBIT and Market Capitalization. Furthermore 17 environmental activities and their assumed impact on financial benefits are analyzed for ten different industry sectors. The data sample for this research paper has been taken from Thomson Reuters Database ASSET4 and includes 3115 firms. The results show that there is a positive and non-linear link between the sustainability performance and the financial performance of firms, intending that financially more successful firms can gain greater benefits from being sustainable than less successful firms do. Furthermore sustainable environmental activities have been identified for different industry sectors, which indicate to lead to an increase of the financial performance.

Using blockchain adoption (BCA) data for 81 leading public companies in 2021, this study examines the impact of blockchain adoption on organizations’ environmental, sustainability, and governance performance. Employing the 2022 ESG scores from LSEG (Refinitiv) Database, which assess corporate sustainability performance across environmental, social, and governance dimensions, we regress ESG scores against blockchain adoption levels, company size, and various financial performance metrics. The results from the regression analysis reveal that blockchain adoption is significantly and positively associated with two sub-dimensions of environmental sustainability performance: resource usage and emissions. Additionally, firms exhibiting higher profitability and greater financial leverage appear to more effectively control blockchain adoption to enhance their corporate sustainability performance. These findings support the notion that blockchain adoption offers eco-efficient solutions that contribute to improved corporate sustainability performance, particularly through improved resource management and emissions control, while also offering actionable recommendations for policymakers and industry leaders.

It is of great importance to gain a better understanding of the impact of external stakeholder groups on an organization’s supply chain management strategies and practices. The greater challenge is to know how the two constructs affect an organization’s sustainability and performance. This study aims to investigate the relationship between stakeholder pressure (SP), sustainable supply chain management (SSCM), corporate sustainability performance (CSP) & financial performance (FP). For this we proposed a theoretical framework, modifying Wolf’s (2014) model, to incorporate the mediating role of sustainable SCM. Stakeholder pressure is captured by environmental issues and social supply chain issues. Sustainable SCM was measured by waste reduction (WR), green purchasing (GP), and social supply chain standards (SSCS). Empirical validity was established by conducting a survey using a close-ended questionnaire. Data was collected from 310 employees and analyzed using confirmatory factor analysis and structured equation modeling. Findings show that environmental issues have a significant effect on CSP, FP & SSCM, sustainable supply chain management (SSCM) except green purchasing (GP) has a significant effect on CSP, FP hence green purchasing has insignificant results. Social supply chain issues have not a significant effect on CSP, FP, and waste reduction (WR). There is a mediating effect of SSCM on environmental issues that leads to CSP & FP, but not on supply chain issues. This study will add to the existing knowledge of sustainability by different firms of a developing country like Pakistan. This will also help in understanding that how stakeholder pressure affects the reputation of organizations in result firms mount their strategies and tactics, and can better understand that what measures they should take for environmental and social standards by focusing on employee safety, suppliers’ engagement, and safety programs.

It is of great importance to gain a better understanding of the impact of external stakeholder groups on an organization’s supply chain management strategies and practices. The greater challenge is to know how the two constructs affects organization’s sustainability and performance. This study aims to investigate the relationship between stakeholder pressure (SP), sustainable supply chain management (SSCM), corporate sustainability performance (CSP) & financial performance (FP). For this we proposed a theoretical framework, modifying Wolf (2014) model, to incorporate the mediating role of sustainable SCM. Stakeholder pressure is captured by environment issues, and social supply chain issues. Sustainable SCM was measured by waste reduction (WR), green purchasing (GP) and social supply chain standards (SSCS). Empirical validity was established by conducting a survey using close ended questionnaire. Data was collected from 310 employees and analyzed using confirmatory factor analysis and structured equation modeling. Findings shows that environmental issues have significant effect on CSP, FP & SSCM, sustainable supply chain management (SSCM) except green purchasing (GP) has significant effect on CSP, FP hence green purchasing has insignificant results. Social supply chain issues have not a significant effect on CSP, FP and waste reduction (WR). There is a mediating effect of SSCM on environmental issues leads to CSP & FP, but not on supply chain issues. This study will add to the existing knowledge of sustainability in by different firms of a developing country like Pakistan. This will also help in understanding that how stakeholder’s pressure effects the reputation of organizations in result firms mount their strategies and tactics, and can better understand that what measures they should take for environmental and social standards by focusing on employee safety, suppliers’ engagement, and safety programs.

Purpose This research aims to investigate the relationships between organizational learning (OL), corporate social responsibility (CSR), corporate financial performance (CFP) and sustainable corporate performance (SCP) within the context of food-manufacturing family enterprises in Vietnam. Specifically, the study strengthens the combination of these three factors that collectively contribute to enhancing SCP. Furthermore, the research explores the role of service quality (SQ) and green brand innovativeness (GBI) as strategic levers for achieving a competitive edge in SCP within family enterprises. Design/methodology/approach This study was used the quantitative method to evaluate the influence of CSR, OL, CFP, SQ and GBI on the SCP of family enterprises. The study sample comprised 456 responses from top and middle management of organizations and used the smart partial least squares SEM (version 3.3.2) to analyze the data in the year 2024. Findings The study provides significant positive relationships between OL, CSR and CFP in contributing to enhancing SCP within family enterprises. Results suggest that firms with strong OL, CSR and CFP collectively could improve SCP. Furthermore, SQ and GBI emerged as integral factors in differentiating family enterprises in terms of SCP. While SQ plays a significant role in building customer loyalty and trust, GBI is crucial for positioning family enterprises as a sustainable one in the market. Thus, this study contributes to the existing academic knowledge by providing insights into how family enterprises can effectively balance economic, social and environmental objectives for long-term sustainability. Originality/value While previous studies have explored these factors independently, this study offers a novel perspective by examining their performances correlatively. The outcomes of this study provide valuable guidance for family enterprises’ managers, CEOs and business leaders to make strategic sustainability plans and create competitive edge when it comes to SCP.

Owing to the importance of corporate sustainability, companies provide sustainability reports based on various criteria to achieve competitive advantage. However, whether resource allocation for improving corporate sustainability performance (CSP) affects the sales performance of a firm must be determined. This study is performed to understand the effect of CSP on sales performance. Data are obtained online from 302 managerial-level professionals via a primary survey. Structural equation modeling and multigroup moderation analyses are conducted to examine the primary responses of managers in India. The results show that CSP positively affects the sales performance of firms, irrespective of the firm characteristics. This study addresses a significant disparity in the CSP domain, particularly the association between CSP and the sales performance of firms in a developing nation. Additionally, it highlights the slight advantage of new firms over old ones and large firms over small ones. The study concludes with several theoretical and managerial implications, followed by the limitations and directions for future research.

This study aims to examine the effect of corporate governance on the Corporate sustainability performance. The samples of this study consist of publicly-traded primary and secondary sector companies in Indonesia for eleven years, from 2010 to 2020. This study discusses the effect of corporate governance on corporate sustainability performance, Corporate governance, and corporate sustainability performance. The data used in the study are hand-collected data sourced from annual financial and company sustainability reports. The findings of the study indicate that Corporate Governance (CG) is positively affecting the Corporate Sustainability Performance (CSP) and its dimensions (Economy, Environmental, and Social aspects) significantly. Furthermore, the findings of the study have also disclosed that the CG elements consisting of the rights of shareholders (Category A), The equitable treatment of shareholders (Category B), The role of stakeholders in corporate governance (category C), disclosure principles and transparency (category D), and the responsibilities of the board (Category E) relatively showing positive effects significantly towards the CG and its elements. However, different effects have been found in the elements B and D, where it is showing that the sample companies indicate the weaknesses in the practice of the equitable treatment of shareholders and Disclosure and transparency. This study is expected to contribute to or assist the companies’ policymakers by creating regulations to improve the Corporate sustainability performance. Our research adds to the research on corporate governance and Corporate sustainability performance in analyzing the correlation between CG and CSP deeply and broadly by utilizing the instruments according to the developed OECD principles.