How Do Companies Respond to Environmental, Social and Governance (ESG) ratings? Evidence from Italy

While a growing number of firms are being evaluated on environment, social and governance (ESG) criteria by sustainability rating agencies (SRAs), comparatively little is known about companies' responses. Drawing on semi-structured interviews with companies operating in Italy, the present paper...

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Vydané v:Journal of business ethics Ročník 171; číslo 2; s. 379 - 397
Hlavní autori: Clementino, Ester, Perkins, Richard
Médium: Journal Article
Jazyk:English
Vydavateľské údaje: Dordrecht Springer 01.06.2021
Springer Netherlands
Springer Nature B.V
Predmet:
Business
Business and Management
Business Ethics
Companies
Conformity
Education
Employee behavior
Environmental governance
Environmental social & governance
Ethics
Governance
Management
Original Paper
Philosophy
Quality of Life Research
Ratings & rankings
Resistance
Responses
Scores
Sustainability
Typology
Italy
ESG
Investors
Sustainability
Rating
Corporate response
ISSN:0167-4544, 1573-0697
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Shrnutí:While a growing number of firms are being evaluated on environment, social and governance (ESG) criteria by sustainability rating agencies (SRAs), comparatively little is known about companies' responses. Drawing on semi-structured interviews with companies operating in Italy, the present paper seeks to narrow this gap in current understanding by examining how firms react to ESG ratings, and the factors influencing their response. Unique to the literature, we show that firms may react very differently to being rated, with our analysis yielding a fourfold typology of corporate responses. The typology captures conformity and resistance to ratings across two dimensions of firm behaviour. We furthermore show that corporate responses depend on managers' beliefs regarding the material benefits of adjusting to and scoring well on ESG ratings and their alignment with corporate strategy. In doing so, we challenge the idea that organisational ratings homogenise organisations and draw attention to the agency underlying corporate responses. Our findings also contribute to debates about the impact of ESG ratings, calling into question claims about their positive influence on companies' sustainability performance. We conclude by discussing the wider empirical, theoretical and ethical implications of our paper.
Bibliografia:ObjectType-Article-1
SourceType-Scholarly Journals-1
ObjectType-Feature-2
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ISSN:0167-4544
1573-0697
DOI:10.1007/s10551-020-04441-4