Abstract
The purpose of this research study is to examine and explain whether there is a positive or negative linear relationship between sustainability reporting, inadequate management of economic, social, and governance (ESG) factors, and corporate performance and sustainable growth. The financial and market performances of companies are both analyzed in this study. Sustainable growth at the company level is introduced as a dimension that depends on sustainability reporting and the management of ESG factors. In order to achieve the main objective of the paper, the methodology here focuses on the construction of multifactorial linear regressions, in which the dependent variables are measurements of financial and market performance and assess corporate sustainable growth. The independent variables of these regressions are the sustainability metrics and the control variables included in the models. Most of the existing literature focuses on the causality between sustainability performance and financial performance. While most impact studies on financial performance are restricted to sustainability performance, this study refers to the degree of risk associated with the inadequate management of economic, social, and governance factors. This work examines the effects of ESG risk management, not only on performance, but also on corporate sustainable growth. It is one of the few studies that addresses the problem of the involvement of companies in controversial events and the way in which such events impact the sustainability and sustainable growth of the company.
Highlights
In today’s business environment, the modern architecture of corporate sustainability is based on three pillars: Economic integrity, social justice and value, and environmental integrity [1]
The statements about multiple regression that we tested were the following: (a) The independent variables are collectively linearly related to the dependent variable; and (b) every independent variable is linearly related to the dependent variable
There are a number of measures that one can use to determine whether a multiple regression model is a good fit for a given dataset
Summary
In today’s business environment, the modern architecture of corporate sustainability is based on three pillars: Economic integrity, social justice and value, and environmental integrity [1]. It is clear that the combination of these factors will enable businesses to become profitable by achieving long-term growth goals, raising productivity, and optimizing shareholder value. Corporate sustainability can be seen as a modern concept in the field of corporate governance which enhances efficiency, shareholder value, and sustainable growth as an alternative to the traditional model of producing and optimizing income, especially as the main goal of the organization. This emerging paradigm considers that, while profit creation and maximization are important, there are other objectives with an impact on society that corporations must follow, such as those related to sustainable development
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