The Environmental, Social, Governance, and Financial Performance Effects on Companies that Adopt the United Nations Global Compact

By Eduardo Ortas, I. Álvarez, Ainhoa Garayar. 2015

128 citations recorded by the source corpus.

This paper aims to investigate companies’ environmental, social, governance (ESG), and financial implications of their commitment to the United Nations Global Compact (UNGC). The focus is placed on companies operating in the three countries with the highest number of UNGC participants: Spain, France, and Japan. The results clearly reveal that adoption of the UNGC often requires an organizational change that fosters stakeholder engagement, ultimately resulting in improvements in companies’ ESG performance. Additionally, the results reveal that ESG performance has a significant impact on financial performance for companies that adopted the principles of the UNGC. These findings provide both non-financial and financial incentives to companies to commit to this voluntary corporate social responsibility (CSR) initiative, which will have important implications on companies’ strategic management policies that aim to foster sustainable businesses and community development. Finally, the linkages between the UNGC-committed companies’ ESG and financial performance may be influenced by geographical spread, mainly due to the appearance of differences in the institutional, societal, and cultural settings.

Subfields: Marketing, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/c93feada2ad1ff72277616f00450cc75dc5869f9

How researchers see this paper

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In Marketing

1. D. Zainal
2. Gaurav Talan
3. Sayema Sultana
4. Norhayah Zulkifli
5. Gagan Deep Sharma

In Strategy and Management

1. Gagan Deep Sharma
2. D. Zainal
3. Gaurav Talan
4. Sayema Sultana
5. Norhayah Zulkifli

Citations in the corpus

• Environmental, Social and Governance (ESG) and Investment Decision in Bangladesh (2018, background): “Sustainable development is a global concept [3] that arose a few decades ago [4] and should be evaluated by all stakeholders [5].”
• Doing Well by Doing Good: A Systematic Review and Research Agenda for Sustainable Investment (2019, background): “Ortas, Álvarez, & Garayar [76] also observed a positive linkage between ESG performance and the financial performance of a firm.”
• Inside the ESG Ratings: (Dis)Agreement and Performance (2020, methodology): “Ortas et al. (2015), using the ASSET4 Database including MSCI data, obtain similar results for the cases of Spain, France and Japan, stressing the significant positive impact of ESG performance on financial performance for companies adopting the United Nations Global Compact (UNGC).”