Abstract
BackgroundEnvironmental, social, and governance (ESG) engagement is expected to benefit corporations in terms of their efficiency and sustainability. The transformative change in management practices would not only provide support for employees but also bring about additional workload, which may affect employee psychological well-being. However, the examination of the relationship between corporate ESG activities and occupational stress is scarce; hence, this study aims to fill this knowledge gap.MethodsIn total, 110,351 observations were collected from 41,998 employees regarding occupational stress to reflect employee psychological well-being. The data were derived from 11 corporations in Japan from 2017 to 2019. Data on ESG activities were collected from the MSCI ESG database from 2015 to 2017. The effect of 1-year lagged corporate ESG activities on employee psychological well-being was investigated using a lagged variable linear regression model.ResultsPositive and negative relationships were found between corporate environmental activities and occupational stress. Activities that reduce water stress during operation and adopt clean technology were found to benefit employees’ psychological well-being. On the contrary, the program for reducing toxic emissions and waste lowered employees’ occupational stress levels significantly. Regarding corporate social activities, the improvement of job satisfaction or work-life balance was associated with occupational stress. However, corporate governance activities were found to have unfavorable effects on employees’ psychological well-being.ConclusionThe effects of corporate ESG activities on employees’ psychological well-being are found. The managerial implications suggest that caring for employees’ occupational stress during the implementation of environmental activities is necessary, and the adoption of social activities could enhance employees’ psychological well-being. Notably, corporate governance activities are a stressor for employees; top management teams should pay attention to it.
Highlights
Environmental, social, and governance (ESG) engagement is expected to benefit corporations in terms of their efficiency and sustainability
The evidence showed the benefits of ESG activities on firm performance, Drempetic et al [4] pointed out that a firm size bias exists in the current measurement of the ESG ratings, which might not provide an exact evaluation of the corporate sustainability performance that the responsible investors and related stakeholders need
Numerous studies found that mixed relationships exist between corporate sustainability performance and financial performance by using the current ESG ratings [5,6,7], which implies that it is necessary to consider factors that may detriment corporate performance during the implementation of ESG activities
Summary
Environmental, social, and governance (ESG) engagement is expected to benefit corporations in terms of their efficiency and sustainability. Numerous studies found that mixed relationships exist between corporate sustainability performance and financial performance by using the current ESG ratings [5,6,7], which implies that it is necessary to consider factors that may detriment corporate performance during the implementation of ESG activities. Kazmi et al [11] investigated occupational stress and job performance of Canadian blue-collar and managerial workers. They found a strong negative relationship between the stated variables, which indicated that higher levels of occupational stress resulted in worse job performance. Occupational stress is neglected in the measurement of ESG ratings, and studies on the relationship between corporate ESG activities and employee psychological well-being are limited
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