Corporate Sustainability Index Research Articles

DESEMPENHO ECONÔMICO-FINANCEIRO DAS EMPRESAS LISTADAS NO ÍNDICE DE SUSTENTABILIDADE EMPRESARIAL ISE B3

The study investigates the effect of including companies in the theoretical portfolio of the Corporate Sustainability Index (ISE B3) on the average values of financial indicators. The variables of interest encompassed general liquidity (ILG), general indebtedness (IEG), return on investment (ROI), and return on equity (ROE). The ISE B3 consists of companies selected based on financial and sustainability criteria, with financial indicators crucial for monitoring business performance. The methodology was descriptive, quantitative, and qualitative, with hypothesis testing on two databases, including companies listed on the B3 between 2013 and 2022, comparing those that were included and those that were not included in the ISE B3 portfolio. Results revealed that companies included in the ISE B3 portfolio had higher ROI during the membership period, while those outside the portfolio showed higher ILG, indicating better liquidity. IEG was higher for companies outside the portfolio, suggesting higher indebtedness, while ROE was superior for companies included in the portfolio, indicating higher profitability on equity. Inclusion in the ISE B3 portfolio significantly influenced IEG, suggesting lower indebtedness for included companies, while ILG also showed statistically significant differences, indicating lower liquidity for companies in the portfolio, with ROI and ROE demonstrating significance at different levels, suggesting higher profitability returns for investments and equity in these companies. Further investigation of other indicators is recommended to better understand the variations influenced by companies' participation in the sustainability journey.

Evolution and Challenges of Environmental, Social, and Governance Practices: An Analysis of the Brazilian Stock Exchange’s Corporate Sustainability Index

Environmental, social, and governance (ESG) practices are increasingly recognized as critical for corporate sustainability and market competitiveness, driven by heightened expectations from investors, governments, and consumers. This study examines the evolution of ESG practices among companies listed on the Brazilian Stock Exchange’s Corporate Sustainability Index (ISE B3) from 2005 to 2022. We analyzed the index portfolio’s composition, focusing on changes in ESG dimensions over time. The only six long-lived companies in this index, from retail, banking, and energy sectors, were selected for in-depth analysis. We further evaluated the quality and consistency of ESG disclosures in company reports. Findings indicate relevant fluctuations in the number of companies included in the ISE B3 and variations in ESG scores for the companies. These variations may be attributed to the voluntary nature of ESG practices and the absence of standard disclosure. This study reveals a lack of homogeneity in ESG reporting, which could be addressed by establishing more straightforward guidelines and global standards. This research underscores Brazilian companies’ challenges navigating diverse ESG frameworks to align with evolving societal and environmental expectations.

Effect of the Brazilian corporate sustainability index on cash holdings and the moderating role of Covid‐19

AbstractThis study investigates the effect of the Brazilian Corporate Sustainability Index (ISE) on cash holdings and the moderating role of Covid‐19. Our sample comprises 213 non‐financial publicly listed firms from Brazil with 1072 firm‐year observations available on Refinitiv Eikon database from 2015 to 2022. Our overall findings show a positive association between ISE and cash holdings for the entire period analyzed. However, we find that ISE companies retained less cash in the pandemic period. Furthermore, external financial constraint is a channel through which ISE companies tend to lower their levels of cash holdings during the Covid‐19 outbreak. Our main results are robust to alternative measures of cash holdings. Therefore, we contribute to the corporate financial, sustainability, and Covid‐19 literature by providing the first empirical evidence of the dynamic nature of the relationship between ISE and cash holdings during external shocks and further comprehension to investors that sustainable practices reflected on the financial resource strategies are essential information during crises.

EFICIENCIA SOSTENIBLE: ANÁLISIS DE LAS EMPRESAS QUE FORMAN PARTE DEL ÍNDICE DE SOSTENIBILIDAD EMPRESARIAL

The study sought to analyze the sustainable efficiency of companies that integrate the corporate sustainability index (ISE) and publish their sustainability reports following the guidelines of the Global Reporting Initiative (GRI). In order to understand how sustainable the organizations are, several indexes were elaborated, one of them being the ISE. This is a quantitative study, based on Data Envelopment Analysis (DEA), with the aid of DEA-SAED software covering data for 2016, from thirteen companies that were on the ISE list in the period 2015-2017. The results indicate that four companies achieved sustainable efficiency, two in the energy sector, one in the communications segment and one in pulp / paper. It is concluded that efficient companies are heterogeneous, belonging to different sectors. It is also concluded that participating in ISE and publishing its reports in GRI format is no guarantee of achieving sustainable efficiency.

Evidence of sustainable development goals disclosure in publicly traded Brazilian companies

Purpose: This article examines if publicly traded Brazilian companies listed on the Brazil 50 Index (IBrX50) and the Corporate Sustainability Index (ISE) use Sustainable Development Goals to guide their environmental, social, and governance practices (ESG).
 Methodology: The evaluation is carried out through the descriptive content analysis of companies listed on the IBrX50. We highlight that they were also listed on the ISE B3 in the year 2022. Data was gathered from the companies’ sustainability reports and on websites specialized in ESG assessments.
 Results: The research presents analogies between the ISE B3 and the IBrX50 theoretical portfolios while analyzing the assets in their portfolios and ESG scores. We additionally look into the proximity of the assets in relation to the disclosure of the Sustainable Development Goals in their sustainability reports. We found that, although most companies publish sustainability reports and mention the SDGs, few disclose the goals and initiatives aimed at sustainable development practically.
 Contributions of the Study: The article contributes to the field of research on the voluntary disclosure of information on sustainability. It presents an initial overview on SDGs disclosure in sustainability reports within the Brazilian context. Future studies may explore analyzes which include ESG practices in companies.

SUSTAINABILITY PERFORMANCE INDICATORS

Sustainable Balanced Scorecard (SBSC), Organizational Sustainability Performance Index (OSPI), and Corporate Sustainability Index (ISE) are all tools that help organizations measure and manage their sustainability performance. SBSC integrates sustainability considerations into traditional performance management systems, while OSPI and ISE provide sustainability performance benchmarks for organizations to assess their sustainability performance and identify areas for improvement. These indicators reflect a growing emphasis on measuring and managing sustainability performance in organizations and are likely to become increasingly important as stakeholders demand more transparency and accountability in sustainability reporting. Sustainable Management System (SMS), Environmental Management Accounting (EMA), Sustainability Management Accounting (SMA), and the Composite Index of Sustainable Development (ICSD) are all indicators that reflect the growing emphasis on sustainable practices and accounting frameworks in today’s business and economic. SMS helps organizations integrate sustainability considerations into their operations, while EMA and SMA provide tools for identifying and measuring the environmental and social costs and benefits of business activities. ICSD measures a country’s progress towards sustainable development based on various economic, social, and environmental indicators. These indicators suggest a growing recognition of the importance of sustainability in economic development and decision-making processes, and are likely to become increasingly important as organizations and governments continue to prioritize sustainability.

Family businesses and sustainable development goals

We analyzed the effect of family businesses participating in the Corporate Sustainability Index on adopting Sustainable Development Goals (SDGs). Our sample consisted of 43 Brazilian companies listed in the Corporate Sustainability Index (CSI) that totaled 126 observations from 2019 to 2021. We submitted the data to exploratory factor analysis to estimate the different dimensions of the SDGs (social, economic, and environmental) that, therefore, were analyzed using panel data regression. We found that family-run companies reduce practices linked to the social dimension of the SDGs. However, the fact that the company is family-owned or has family control does not influence practices linked to the SDGs in the social, economic, and environmental dimensions. We found that family-run companies are unrelated to adopting SDG practices in the economic and environmental dimensions. Our results contribute to discussions about the environment, sustainability, investments that value socio-environmental responsibility, the activities of family businesses, and adherence to the SDGs. Especially when showing that the different characteristics of family businesses in Brazil that make up the CSI generally do not imply an increase in practices related to the SDGs. Therefore, our findings can help investors, creditors, and regulatory bodies decide on adopting socio-environmental practices.

The Behavior of the Stocks of Sustainable Companies in the Electric Sector in Relation to B3's Corporate Sustainability Index

Objetivo: Comparar e analisar as rentabilidades das empresas elétricas sustentáveis com as empresas sustentáveis brasileiras do Índice de Sustentabilidade Empresarial da B3. Referencial teórico: Abordou-se o importante conceito de Triple Bottom Line nas empresas e na sociedade, atrelado às empresas sustentáveis do setor elétrico. Método: Utilizou-se de estatística descritiva e aplicada com testes estatísticos não paramétricos para uma distribuição de não normalidade para análise dos dados coletados. Resultados e conclusão: A pesquisa apresenta que, ao que tudo indica, há conexão entre as rentabilidades das empresas sustentáveis do setor elétrico com a totalidade de empresas que compõe o índice de sustentabilidade empresarial da B3 e que, portanto, estar relacionada no rol de empresas sustentáveis é agregar valores de boa imagem e de sustentabilidade para a empresa do setor elétrico. Implicações da pesquisa: A pesquisa detalha, empiricamente, que ser sustentável é rentável para as empresas do setor elétrico a longo prazo, pois suas rentabilidades podem ser atreladas ao grupo de empresas sustentáveis da B3. Esse fato contribui para que outras empresas do setor elétrico possam fazer parte do índice de sustentabilidade empresarial e, por conseguinte, tenham boas práticas de sustentabilidade ambiental, social e econômica. Originalidade/valor: Este estudo é vanguardista em comparar sustentabilidade no setor elétrico, amplifica o discurso de sustentabilidade empresarial e incentiva que o máximo de empresas, principalmente do setor elétrico, possam ter cultura sustentável em seus negócios.

Corporate social responsibility: a study on the performance of companies in the social dimension within the BM&FBOVESPA'S corporate sustainability index (2014-2017)

Corporate Social Responsibility is a theme that has guided the management of companies towards long-term survival, since it reduces risks in production and operations, generates tax exemptions and consumer preference, provides better returns to shareholders and improves society by achieving social actions that bring benefits to the community. In this sense, the present work analyzes corporate social responsibility from the perspective of the social dimension, where its general objective is to demonstrate the performance of companies participating in the BM&FBOVESPA's Corporate Sustainability Index in this dimension, and from this to verify the level of commitment and the differences between them. Through qualitative analysis, there was a detailed exploration of questionnaires answered by three companies that are members of the index. The results show that none of the companies achieved the maximum performance, and that even though the three companies are part of the same index, their performances are quite diverse, revealing that the social dimension, despite receiving more attention in recent years, still requires greater commitment from the companies.

Level of Disclosure of Environmental Provisions and Contingent Liabilities

Disclosure allows accounting to achieve its main objective, that of providing useful and reliable information to its users. Thus, based on the Theory of Disclosure, this study aims to identify the level of disclosure of provisions and environmental contingent liabilities of companies with high potential for pollution. For this, descriptive research with a qualitative approach was carried out, applying the content analysis technique in the financial statements between the years 2010 and 2019. For data collection, a checklist prepared according to the established criteria was used. by the Accounting Pronouncements Committee No. 25 (CPC 25) for the recognition and disclosure of provisions and contingent liabilities of an environmental nature. The findings reveal a low disclosure of the established items, despite the growing number of affirmative observations in the last three years. As for the level of disclosure, the results showed that the most prominent segment was the extraction and treatment of minerals, with a percentage of 73% in the group of companies listed on the ISE. Regarding the analysis of the groups, the average of the companies listed and not listed on the Corporate Sustainability Index (ISE) was calculated, showing through the Student's T test the existence of a statistically significant difference between the averages, of 27.66 and 15 ,21, respectively, accepting and rejecting the research null hypothesis. However, the need for other analysis methods was identified to confirm whether the companies included in the ISE have a higher level of disclosure.

Islamic corporate sustainability practices index aligned with SDGs towards better financial performance: Evidence from the Malaysian and Indonesian Islamic banking industry

Exploring the link of corporate sustainability practices towards financial performance remains an area of interest to many scholars. But still, the Islamic perspective of the nexus is over sighted. In this vein, the main objective of this study is to inquire about the nexus of corporate sustainability practices towards financial performance from an Islamic perspective. However, the major challenge in this regard is the unavailability of an Islamic corporate sustainability index. To cope with the challenge, this study developed a novel Islamic corporate sustainability practices index and aligned it with sustainable development goals for greater generalizability and better financial performance. The study collected 10 years of panel data (2009–2018) for 16 Islamic banks in Malaysia and 12 Islamic banks in Indonesia. Panel corrected standard errors regression technique was used to analyse panel data. Results were first generated on the combined dataset including both Malaysia and Indonesia, and then from individual countries' perspectives to obtain a holistic point of view. Furthermore, results are also generated on Islamic corporate sustainability practices as a formative factor as well as a reflective factor indicating (environmental, economic and social) dimensions. Results of panel corrected standard errors regression analysis show that Islamic corporate suitability practices as a formative factor have a significant positive impact on financial performance from the combined as well as the separate dataset from Malaysia and Indonesia. However, results of the reflective factors of Islamic corporate sustainability practices show variation in the combined (Malaysian and Indonesian) dataset. These results provide insights into various policy formulations at Malaysian and Indonesian Islamic banks in specific. And in general, these results insights into the world Islamic banking industry for ensuring better compliance with sustainable development goals aimed at achieving greater financial performance. More importantly, this study may serve as a launching pad for the development of the global Islamic banking corporate sustainability practices index.

Corporate sustainability and shareholder return: A comparative study on the return of the shares that make up the B3 corporate sustainability index

This article aims to answer the following question: Do companies with sustainable initiatives bring a greater return to shareholders? The authors have built a hypothetical portfolio based on the B3 Corporate Sustainability Index (ISE) methodology through an ex-post facto descriptive research. The authors have also calculated the beta and weighted returns considering each share weight and the proportional impact on the portfolio. The alpha calculation and the association with the Student 's t-test allowed investigation on the possibility of an incremental return concerning the adopted reference. We have concluded that the responsible investment strategy in companies considered sustainable, through the hypothetical portfolio, does not bring the possibility of an incremental return to the shareholder when compared to the market portfolio. On the other hand, the hypothetical portfolio does not bring a return lower than the market portfolio. That is, its performance does not fall short.

Pricing uncertainty in the Brazilian stock market: do size and sustainability matter?

This article analyzes the pricing of innovations in the Brazilian stock market during periods of economic uncertainty. Cross-sectional data were analyzed using the generalized method of moments technique, and our findings indicate that during such periods, innovations negatively impact excess stock returns. Furthermore, our findings suggest that innovations during economic uncertainty improve the pricing of financial assets, making them a significant risk factor. These results are corroborated by those for the Corporate Sustainability Index and the Small Caps Index in the robustness analysis.

Corporate Venture Capital and Sustainability

Corporate Venture Capital (CVC) has been receiving increasingly more attention all over the world as a special way for accessing new ideas and innovative opportunities through minor-share investing in established companies. The purpose of CVC investments may either be purely financial or to pursue strategic goals. Organisations often seek to take actions that impact positively on sustainability by assembling related knowledge and technologies. These resources may come from invested startups through the use of a CVC programme. This research aims to measure and analyse the Corporate Venture Capital programmes of companies listed in the ISE B3 Corporate Sustainability Index. To this end, a three-step methodology was conducted. First, a systematic review of the literature took place, followed by a review of companies based on secondary sources such as their websites. Finally, a survey was developed and was opted to survey companies through their Investor Relationship (IR) public channels. Results show that 27 of the companies listed in the ISE B3 Index have CVC programmes that contemplate organizational initiatives besides investment. In this sense, one can claim that at least 70% of the ISE B3 Index companies are somehow involved in CVC operations. The results contribute to the literature on corporate venture capital and sustainability by showing that companies spend from 10% to 15% of their capital in sustainable businesses in order to remain competitive.

SDG Adherence of Social Performance Indicators Used by Brazilian Mining, and Oil and Gas Extraction Companies

This study aimed to examine whether the social performance indicators used by mining companies participating in the BM & FBOVESPA Corporate Sustainability Index (indice de sustentabilidade empresarial [ISE]) during 2005–2021 were aligned with United Nations’ Sustainable Development Goals (SDGs). Content analysis was conducted after collecting key information from voluntary sustainability reports presented by the companies. The results uncovered 423 social indicators and revealed repeated discontinuity and large time gaps of as many as 6 years in the disclosure of sustainability information. Among the SDGs investigated, the most discussed were (in order): SDGs 4, 3, 5, 1, 10, and 2. Thus, it is recommended that even though SDGs have been implemented since 2015, the desired social impact can be created only when companies in the mining and extraction sectors make a formal commitment to continuously disseminate sustainability reports and work equitably on SDG goals.

The relationship between climate change mitigation strategies and the financial performance of Brazilian companies

AbstractStudies on the relationship between corporate sustainability strategies and financial performance are often dealt with in a broad manner, which can hinder the ability to consolidate knowledge on the subject. In order to add greater depth and understanding to the debate, this study focuses on the issue of climate change mitigation strategies (CCMS). This focus allows for a reduction in the complexity of the analyses of the relationship between environmental and financial performance, and a more thorough discussion of corporate sustainability strategy choices. To analyze the relationship between CCMS and financial performance, this research collected data from 61 companies that took part in the selection process for the Corporate Sustainability Index (ISE) of the Brazilian Stock Exchange (B3), which was published between 2013 and 2019, and contained 249 observations. The research used multivariate analysis with the panel data regression method. The results showed there to be a positive and statistically significant relationship between CCMS and the financial performance of companies, indicating that the corporate implementation of practices and policies for facing up to climate change can lead to both environmental and economic benefits for companies.

Are Natural-RBV Strategies Profitable? A Longitudinal Study of the Brazilian Corporate Sustainability Index

Purpose – The aim of this research is to analyze whether natural resource-based view (NRBV) strategies lead to financial performance, represented by market value in the Brazilian stock exchange (B3) Corporate Sustainability Index (ISE).Theoretical framework – The NRBV foresees three green strategies to achieve sustainable competitive advantage: pollution prevention, product stewardship and sustainable development. Many studies have tested one or two of those strategies. We tested if all three strategies are related to the financial performanceof companies in the ISE index.Design/methodology/approach – We collected five years of data from 18 companies that compose the ISE index and employed panel data analysis in this longitudinal study.Findings – All three strategies of the NRBV are related to the companies’ market value in different ways. The results diverge from the current literature because we found positive and negative links between environmental strategies and financial performance.Practical & social implications of research – This study contributes with empirical results from the B3 to analyze the ISE index using the NRBV approach as a theoretical basis. It suggests that not all environmental initiatives increase companies’ market value, as some actions may end up achieving the opposite outcome. Investors and society, in general, are entitled to know how companies implement sustainable strategies that go beyond those required by law. Originality/value – The major contribution of this study is it addresses all three NRBV strategies to investigate if it pays to be green in terms of market value, by analyzing the Brazilian sustainable organizations that compose the ISE index.Keywords – NRBV, corporate sustainability, financial performance, market value, sustainable development.

NÍVEL DE DISCLOSURE AMBIENTAL: POSTURA PROATIVA OU DEFENSIVA DAS EMPRESAS

ABSTRACT This paper investigated which theory best explains companies’ motivation for environmental disclosure: the image theory (proxy: adherence to the Corporate Sustainability Index - ISE), or the legitimacy theory (proxy: materiality of provisions for environmental damage in the Balance Sheet - MatPA). Listed non-financial Brazilian companies with Environmental Disclosure Score (EDS) available on Bloomberg for the period 2010-2018 were analyzed. The panel data analysis indicated that among non-potentially polluting companies, ISE is significant to explain environmental disclosure and MatPA is not; among potentially polluting firms, MatPA is significant, but ISE is not. This suggests the coexistence of two antagonistic motivations for disclosure: the proactive strategy of creating value and differentiation through environmental disclosure prevails (image theory) in non-potentially polluting companies, whereas potentially polluters primarily adopt a reactive attitude toward disclosure, seeking self-legitimation with stakeholders after causing damage to the environment (legitimacy theory).

Toward corporate sustainability through human resources development: Contributions from Brazilian companies

AbstractMany companies have already experienced the benefits sustainability may bring in terms of positive impacts on society, the environment, and its market value. Despite this, most of them do not know how Human Resource Development (HRD) could effectively promote employees' commitment to results and facilitate organizational change. The main objective of this paper is to propose guidelines for the development of human resources that contributes toward sustainability in organizations. The drivers of sustainability and HRD identified in the literature supported the analyses of 19 GRI G4 sustainability reports from Brazilian companies included in the BM&F Bovespa Corporate Sustainability Index (2016). The analyses allowed the characterization of the companies' sustainability and HRD initiatives, as well as the elaboration of ten HRD guidelines to foster corporate sustainability. This work contributes to the articulation on how the concepts of HRD and sustainability are related, promoting the discussion about the drivers of the HRD that can support managers in the journey toward sustainable development.

Fatores Determinantes do Nível de Divulgação Ambiental nos Relatórios Contábeis das Companhias Listadas no Índice de Sustentabilidade Empresarial (ISE)

ABSTRACT: This research aimed to investigate the factors that may influence the level of environmental disclosure in the accounting reports of companies that were part of the ISE portfolio in 13 editions. The disclosure theory was adopted as a theoretical framework and from this seven hypotheses were raised, which related the level of environmental disclosure with the participation in the Corporate Sustainability Index (ISE); size; profitability; indebtedness; nature of the activity; shareholding control; and, different levels of Corporate Governance. The study sample consisted of companies listed on the Brazil Bolsa Balcao (B3) Corporate Sustainability Index (ISE) over the past 13 years, resulting in 48 companies and totaling 624 observations. Data were collected from the Reuters® database, the Standardized Financial Statements, Reference Forms, Explanatory Notes, Management Reports, Sustainability Reports and the B3 website. The results showed that the variables participation in the Corporate Sustainability Index and size had a positive and significant influence on the level of environmental disclosure. In turn, the nature of the activity presented statistical significance and negative association. While the variables profitability, financial debt, shareholding control and different levels of corporate governance did not exert significant influence. These results partially converge with those found in some previous studies and are in line with some assumptions of the disclosure theory. KEYWORDS: Environmental Disclosure, Disclosure Theory, ISE.