Study of Relationship Between the Corporate Governance Factors and ESG Ratings of ICT Companies from the Developed Markets

Abstract

AbstractAssessment of corporate governance determinants of ESG ratings is a task of high interest for researchers and practitioners in project management in information and communication industry (ICT). This is underpinned by the growing interest to responsible and sustainable investing. We analyzed key drivers of governance pillar of ESG ratings of ICT companies in the developed markets. The relevance of the topic was underpinned by significant share of the governance in overall ESG assessment of ICT projects. The paper filled research gaps because existing studies on the topic did not address the governance practices specifically in ICT companies. Conversely, the conclusions for some governance drivers were controversial or incomplete. Data were collected for 80 telecommunication and IT companies between years 2005–2019. The dependent variable was Refinitiv ESG rating. The set of explanatory variables consisted of corporate governance activities labeled as best practices in the literature. It was found that existence of corporate social responsibility (CSR) committee, CEO duality, presence of non-executive members in the board, policy independence and chairman’s past experience and continuity have positive and significant effect on ESG ratings of ICT companies. The presence of non-executive members in the board had marginal effect on ESG ratings. The growing representation of women in boards and management had positive but marginal effect on ESG score. The results can be used in practice for making recommendations for the development of managerial actions aimed at increase in ESG ratings. KeywordsInformation and communication industryProject controllingESG ratingCorporate governanceResponsible investments