Environmental Governance Performance Research Articles

The Impact of Environmental, Social, and Governance (ESG) Performance on Dividend Policy and Economic Outcomes of Pakistani Firms: A Survey-based Research

The purpose of this study was to measure the effectiveness of environmental, social, and governance performance on the dividend policies of registered firms on the (PSX) Pakistan stock exchange. A data set of 261 respondents from the employees of companies listed on the Pakistan Stock Exchange was collected and analyzed using Smart PLS 3. The findings of measurement model assessment and structural model were used for the analysis of the data. Based on the statistical data, the study found that environmental performance, social performance, and governance performance are three significant antecedents of the dividend policy of registered firms on the Pakistan stock exchange (PSX). The research has contributed to the literature about implications of dividend policy. The policy implications of this research are also significant for improving the dividend policy of firms registered on the Pakistan Stock Exchange. This study also aligns with the Sustainable Development Goals (SDGs), particularly SDG 12 (Responsible Consumption and Production) and SDG 13 (Climate Action), by examining how ESG performance influences dividend policies in firms on the Pakistan Stock Exchange. The findings underscore the importance of integrating sustainability into corporate strategies to enhance financial outcomes and support global sustainability targets.

The impact of environmental, social, and governance performance on financial performance: Evidence from Japanese companies

This study examines the impact of environmental, social, and governance (ESG) performance on the financial performance of companies using the Stakeholder Theory. Sustainability is recognized as one of the most significant concepts for all nations and organizations worldwide. The Japanese government, its corporations, and its culture are not exempt from delivering their nation's sustainability goal with the utmost support. Their initiatives taken towards sustainability include introducing Society 5.0, the 'improved society' concept Japan has contemplated before the rest of the world. Society 5.0 for Sustainable Development Goals (SDGs), which originated in Japan, is an aspiring concept that views changes and challenges as opportunities and proceeds to associate them with medium-to long-term development, which leads to the resolution of global challenges. Financial performance focuses on accounting performance through the Return on Equity (ROE). The ESG scores and financial data of 351 listed companies in Japan from 2018 to 2022 were collected from the Thomson Reuters Eikon data stream to study its impact. The regression analysis shows that all environmental performance (EP), social performance (SP), and governance performance (GP) positively and significantly affect profitability, or the Return of Equity (ROE). Meanwhile, the control variable, firm size (SIZE), does not support the study. The findings also found that all ESG performances positively correlate with each other. These results highlight the importance of ESG policy adoption by companies to improve their financial performance. The study’s contributions add value to Japan’s industry practitioners and stakeholders and highlight the importance of ESG to their nation.

Digital Technologies, Environmental Governance and Environmental Performance: Empirical Evidence from China

This research conducts an empirical analysis of the relationship between digital technologies, environmental governance (assessed through environmental taxes), and China's environmental performance from 1995 to 2020. Additionally, within the framework of the STIRPAT model, the impacts of GDP and urbanization on ecological footprints are examined. This study is distinguished by its innovative approach to evaluating environmental performance via ecological footprints and the application of the Autoregressive Distributed Lag (ARDL) model along with Dynamic Ordinary Least Squares (DOLS), Canonical Cointegration Regression (CCR), and Fully Modified Ordinary Least Squares (FMOLS) as long-run estimators, methodologies not previously applied to this context in China. The findings indicate that digital technologies and environmental taxes contribute to a reduction in ecological footprints, while GDP and urbanization have an adverse effect, increasing ecological footprints. Post-estimation diagnostics confirm the absence of serial correlation and heteroskedasticity, and affirm the normal distribution of the disturbance terms. For a robustness check, the study further employs DOLS, FMOLS, and CCR methods, which corroborate the initial results regarding the beneficial impact of digital technologies and environmental governance on ecological footprints. Based on these findings, the study advises the Chinese government and policymakers to enact more effective environmental tax policies and leverage digital technologies to enhance environmental sustainability in China.

The Impact of Innovation Adoption on Sustainable Business Development in China: the role of Environmental, Social, and Corporate Governance Performance

ESG as a phenomenon appears to be consistent with high quality development of economy of country like China, hence, implementation of ESG is essential to embrace sustainability. Thus, it is imperative to scrutinize the its effectiveness and, in this lieu, the study attempts to scrutinize the effectiveness of innovation adoption on the environmental, social and governance performance, and SBD of the electric vehicle industry in the context of China. Along with it, mediating role of ESG performance has also been explored in the study. Primary data was collected for the study and PLS-SEM methodology was used to evaluate the collected data. Results showcase that innovation adoption is positively correlated with ESG performance and SBD of the electric vehicle industry in China. The outcomes also exposed that the ESG performances significantly mediates the relationship between innovation adoption and SBD. In the light of the evidence, the analysis recommends that organizations must value their ESG performance in order to formulate relatable policies.

Does Digitalization Facilitate Environmental Governance Performance? An Empirical Analysis Based on the PLS-SEM Model in China

The development of digitalization has brought about profound changes in government governance, enterprise production and residents’ daily lives. Whether digitalization inhibits environmental pollution is a question that needs to be answered urgently, as it is of great significance for addressing conflicts between human beings and the ecological environment. Moreover, it provides a theoretical basis for China’s green and sustainable development. China’s environmental governance model is in a new stage of “government, enterprise, and public” multifaceted governance. Therefore, this paper empirically analyzes the impact of digitalization on environmental governance performance and its mediating effect from a multidimensional perspective, using inter-provincial panel data from 2011 to 2020 as a sample and employing structural equation modeling. It is found that digitalization can significantly improve environmental governance performance, while mechanism analysis shows that digitalization improves environmental governance performance through improving government environmental regulation, public environmental participation, and corporate green technology innovation. Heterogeneity analysis shows that the contribution of digitization to environmental governance performance varies significantly according to geographic region and regional innovative capacity. Based on this, policy recommendations are proposed in terms of digitalization construction, the government, public and enterprises to form a multi-governance environmental governance system among the government, public and enterprises.

Environmental and social governance performance and enterprise total factor productivity

AbstractWith the popularity of both green development and sustainable investment concepts, evaluation of environmental performance, social responsibility and corporate governance (ESG) is the way for enterprises to protect the environment and, at the same time, interact with stakeholders. This paper first analyses how ESG influences corporate total factor productivity (TFP), then, using A‐share listed company data from 2009 to 2021, conducts an empirical test proving that ESG greatly boosts TFP. Examination of the intermediate mechanism reveals that ESG can improve TFP by raising R&D investment, enhancing the attention of stakeholders, and increasing internal control capabilities. The heterogeneity study shows that, for state‐owned firms, non‐polluting industries, and small‐scale and low‐market degree enterprises, ESG enhances TFP more. Further analysis indicates that ESG uncertainty and ESG catering behaviour will weaken the fostering impact, but environmental regulation has a beneficial regulatory role.

Bank competition and firm greenwashing: Evidence from China

This study investigates the effects of bank competition on firms’ greenwashing. Using Chinese commercial bank branches’ geographic location data, we reveal that increased competition reduces greenwashing among firms located near more bank branches. The study posits that rising competitive intensity may relieve financial constraints, which weakens firms’ inclination to engage in greenwashing. We combine 11,465 observations of Chinese A-share listed firms from 2011 to 2021, bank location data, and environmental, social, and corporate governance (ESG) performance. Our results demonstrate that the effects are stronger for large, financially constrained firms, and those more highly leveraged, with relevant implications for policymakers focused on the consequences of bank deregulation and firms’ ESG performance.

ESG performance and disclosure quality: does a well-balanced board of directors matter when impression management occurs?

PurposeThis paper explores how the disclosure quality, measured by the abnormal tone of environmental and social report, may determine the environmental, social and corporate governance (ESG) performance of the firm. This study also investigates the impact of the moderator “board of directors” to explore the extent to which a well-balanced board of directors may affect this association within an impression management strategy.Design/methodology/approachThis work uses a sample of 616 firm-year observations using a sample of French firms indexed on SBF120 index from 2010 to 2017. To test the developed hypotheses, the GLS regression is applied and to control for endogeneity issue and sample selection bias, the authors used, respectively, the two stage least square (2SLS) procedure and the Heckman model.FindingsFindings suggest that a well-balanced board of directors moderates the relationship between the ESG performance and the disclosure quality. The positive effect of abnormal tone management on ESG is weakened by the presence of a good structure of the board, attenuating impression management initiatives.Research limitations/implicationsThe research provides evidence of the impact of corporate social responsibility (CSR) reporting quality, in particular disclosure tone management, on the level of ESG performance in the French context. As the board of directors may have a major impact on weakening impression management strategies in particular tone management practices, in order to improve CSR report quality, the authors recommend French companies to ensure a well-balanced board of directors.Originality/valueThis study helps investors to comprehensively evaluate the information disclosed on CSR reports. It unveils that a strong board composition induces better quality of CSR report and brings better ESG performance. Thus, the study results point to the importance of a well-balanced board of directors and the regulation of the narrative disclosure of CSR information.

Negative Media Coverage and Corporate ESG Performance: Evidence from China

Using Chinese A-share listed companies from 2011 to 2020 as a research sample, this paper examines the relationship between negative media coverage and corporate ESG performance using a two-way fixed-effects model. It is found that, first, negative media coverage can effectively promote corporate ESG performance. Second, the mediation mechanism study shows that negative media coverage positively promotes corporate ESG performance by increasing the degree of corporate financing constraints and information asymmetry and prompting corporations to change their ESG governance level. Third, the results of the heterogeneity test find that the positive relationship between negative media coverage and corporate ESG performance is more pronounced among firms without executives with overseas backgrounds, and the positive relationship between the two is more significant after the promulgation of China’s Code of Governance for Listed Companies in 2018. Fourth, further discussion revealed that negative media coverage has the strongest promotion effect on the performance of corporate environmental governance, followed by social governance performance, and lastly, corporate governance performance. The research in this paper contributes to an in-depth understanding of the impact of negative media coverage on corporate ESG performance and provides empirical evidence to facilitate policy formulation related to the role of media monitoring and to fully utilize the media’s role in corporate ESG governance.

Green institutional investors’ shareholding and corporate environmental responsibility

Data on listed companies in China from 2016 to 2022 serve as a research sample to investigate whether shareholding by green institutional investors improves the environmental governance performance and initiatives of listed companies. Shareholding by green institutional investors is shown to improve the environmental performance and initiatives of listed companies. The promotion effect of green institutional investors in improving the environmental performance of listed companies is more evident for non-state-owned enterprises and those in non-heavily polluted industries than their counterparts.

Can the green experience of CEO improve ESG performance in heavy polluting companies? Evidence from China

AbstractThis paper focuses on Chief Executive Officers (CEOs) with green experience, using data from listed companies in China's heavy pollution industry spanning from 2011 to 2021, the study explores the impact of CEO green experience on the Environmental, Social, and Corporate Governance (ESG) performance of companies. The study reveals that CEO green experiences contribute to enhancing firms' ESG performance. The research further unveils that management's green perceptions and corporate green innovations play a partial mediating role in the relationship between CEO green experiences and corporate ESG performance. Heterogeneity analysis indicates that the influence of CEO green experiences on corporate ESG performance is more pronounced in samples characterized by high environmental regulation, capital‐intensive operations, and non‐state ownership. The findings of this study enrich the theory of corporate ESG performance power mechanisms and provide theoretical references for enhancing the ESG performance of heavily polluting firms.

The crowding-out effect of the environmental regulation on corporate sustainability

The analysis of the impact of China’s Environmental Protection Tax (EPT) Law on company environmental, social, and corporate governance (ESG) performance is crucial for a more comprehensive understanding of the EPT Law and to improve corporate practices. Using a difference-in-differences (DID) model with a research sample of 7,055 listed firms in China from 2012 to 2020, we found that the EPT Law significantly improved firms’ overall ESG performance. However, this improvement was mainly driven by significant increases in the environmental (E) score. In contrast, the social (S) score declined significantly after the implementation of the EPT Law, indicating a trade-off between environmental regulation and social responsibility. Further analysis also reveals that the increase in production costs, which led to a decrease in employment and wages, is responsible for the crowding-out of social responsibility. This study not only enhances our understanding of the impacts of environmental regulations on companies but also offers guidelines for policymakers to consider the negative externality of policies, which could serve as a “double-edged sword.”

ESG PERFORMANCE IMPACTING ON SYSTEMATIC RISK OF THE LISTED COMPANIES ON THE STOCK EXCHANGE OF THAILAND

Purpose – The research aims to examine the effect of the performance of environmental, social, and corporate governance (ESG) on the systematic risk of the listed companies on the Stock Exchange of Thailand (SET).Methodology – The sample data included 158 listed companies on the SET in 2022. Collected annual data were retrieved from financial statements and the stock exchange database system (SETSMART). The statistics used for analysis were descriptive statistics and inference statistics. Descriptive statistics included mean, standard deviation, maximum, and minimum, while inference statistics included correlation analysis and multiple regression analysis. Results – The research results found that the mean of ESG performance in terms of ESG book and Refinitiv were quite equal at 54.25 and 53.49, respectively. The ESG performance in terms of the ESG book provided a negative relationship with systematic risks at the statistically significant.05 level, while the ESG performance in terms of Refinitiv showed no significant relationship with systematic risks. Interestingly, only the listed companies in the technology sector showed a positive relationship with systematic risks at a.01 statistically significant level.Implications – The critical role of corporate ESG information is to assess a company’s long-term performance for sustainable growth. Therefore, the stock exchange of Thailand must provide knowledge about ESG indices to listed companies and investors to achieve sustainability for both business organizations and investors.Originality/Value – This empirical study contributes as a specification model to explain how ESG performance impacts systematic risk. Additionally, the different ESG indices provide different results. This implies that a deep understanding of the ESG indices is necessary for listed companies and investors.

Environmental protection tax and firms’ ESG investment: Evidence from China

We examine whether and how environmental protection tax (EPT) affects environmental governance performance of firms. To address this problem, we first construct unique indicators to present the different environmental governance of firms in the aspect of E, S, and G, and then combine them with panel data of Chinese listed companies from 2013 to 2020. Through the empirical analysis, we find that EPT has a positive effect on the ESG investment of firms, and the positive effect is more pronounced in private firms, firms with weak competitiveness, and firms located in cities with sound environmental justice. We also find that the pressure on tax payment cost and ex-post non-compliance cost caused by EPT improves the ESG investment of firms. Overall, this paper emphasizes the importance of EPT in promoting the environmental governance of firms.

Retracted: Corporate Environmental Governance Performance Evaluation and Index System Construction under the Mobile Communication System

Retracted: Corporate Environmental Governance Performance Evaluation and Index System Construction under the Mobile Communication System

Does green credit help reduce smog pollution? Empirical evidence from China.

As a resource production factor in environmental governance activities, can green credit help reduce smog pollution? Based on China's provincial panel data from 2006 to 2019, this paper empirically tests the impact of green credit on smog pollution by using an OLS regression model and a spatial Durbin model. The results show that green credit helps to reduce smog pollution overall; Industrial structure upgrading and green technology innovation are two critical paths for green credit to reduce smog pollution. The analysis of period heterogeneity finds that the descending effect of green credit on smog pollution becomes more significant after the transformation of China's economic development stage. The regional heterogeneity analysis finds that the descending effect of green credit on smog pollution is more significant in non-low-carbon pilot provinces and regions with lower economic development levels. In addition, green credit not only helps to reduce local smog pollution but also has a spatial spillover effect of "benefiting thy neighbors" on smog pollution in geographically neighboring areas. This study provides important inspiration for the government to further promote the innovation of green financial instruments and promote the improvement of environmental governance performance, provides decision-making references for different regions to implement differentiated green credit strategies to improve ambient air quality, and provides an experience reference for the development of green finance and environmental governance in emerging market countries.

Research on the Water Environment Governance of Hangzhou Bay Based on the DEA–Tobit Model

With rapid urbanization and industrialization, Hangzhou Bay faces significant pressure in water environment governance. This study, based on panel data from 2011 to 2021 in Zhejiang’s Hangzhou, Jiaxing, Shaoxing, and Ningbo, employs the Super-Efficiency DEA model to assess water environment governance performance. The Tobit model analyzes external environmental factors. Findings reveal fluctuating water governance efficiency during the study period, with inefficiencies from 2012 to 2019, followed by significant improvement from 2019 to 2021. Key factors impacting governance include urban water environment performance in Hangzhou, urban residents’ disposable income, population density, and secondary industry GDP development. A higher urban income enhances environmental awareness and governance performance, while population density and industrial GDP intensify resource use, energy consumption, and wastewater discharge, worsening governance pressures and performance. This research offers insights for enhancing water environment governance in Hangzhou Bay, aiding in the formulation of protection plans and management policies. Additionally, it provides valuable experiences for watershed governance globally.

Scaling up the transition: The role of corporate governance mechanisms in promoting circular economy strategies

This study examines the role of corporate governance (CG) mechanisms in promoting Circular Economy (CE) strategies among non-financial listed companies in manufacturing industries, which is still a relatively unexplored topic in the CE literature. Our findings indicate that the presence of stakeholder engagement practices, sustainability reporting, and environment management teams have a direct impact on the adoption of CE strategies, while the presence of a CSR committee, adherence to the United Nations' Global Compact, and executives' compensation linked to environmental, social, and corporate governance performance do not have a direct effect but support CE strategies through other mechanisms. Overall, this study provides valuable insights for policymakers and managers as it shows that CG mechanisms can be used to promote the adoption of CE business models, thus contributing to climate risk mitigation objectives.

Examining the impact of market power discrepancy between supply chain partners on firm financial performance

Market power reflects a firm's competitive advantage and plays an important role in its performance. However, in a buyer-supplier relationship, how the asymmetric market power between a firm and its partners affects the firm financial performance remains an open question. This study investigates the impact of market power discrepancy (MPD) between a focal firm and its supply chain partners on the focal firm's financial performance, as measured by return on assets (ROA). With empirical evidence from China's listed firms between 2001 and 2021, we find that a higher MPD between the firm and its supplier or the firm and its customer negatively affects the firm's financial performance. A supplier or customer that has a matched market power with the firm is the best candidate for building a relationship. In addition, our findings suggest that the strength of the buyer–supplier relationship amplifies the negative impact of MPD on the firm's financial performance, whereas the level of relationship embeddedness reduces the MPD's negative effect. Moreover, our findings suggest that firm-specific institutional, industry, and regional economic heterogeneities affect the MPD's financial impact. Further, we find that MPD not only negatively affects a firm's financial performance but also worsens its environmental, social, and corporate governance performance. Our study recommends that firms should alleviate the asymmetry of market power with their partners and leverage the relationship dependence to balance power and benefits.

Reexamining the relationship between ESG and firm performance: Evidence from the role of Buddhism

This study examines the relationship between environmental, social, and corporate governance (ESG) and firm performance, with a focus on the impact of Buddhism. Our findings suggest the following: (1) The local Buddhism environment weakens the positive relationship between ESG and firm performance, indicating that ESG practices motivated by internal altruism may not contribute to firm performance. (2) The moderating effect of Buddhism is more pronounced in firms with stronger alignment or monitoring, in which ESG practices are more likely to be motivated by the desire for profitability, i.e., privately owned firms and those with higher institutional ownership and media attention. (3) The attenuating effect of Buddhism's moderating role is observed in two categories of firms: those with heightened exposure to ESG-related risks and those operating in recent eras with a greater focus on ESG, which are more likely to benefit from ESG practices with greater external utility.