Responsible Firms: CSR, ESG, and Global Sustainability: Volume 23

The apparent contemporary corporate model is that of a “responsible firm” – a firm that pursues not only profit and shareholder return but also considers the concerns and interests of its social and environmental stakeholders. Research on corporate social responsibility (CSR), investor recognition via environmental, social, and governance (ESG) issues, and long-term sustainability has developed into an established field of study. We attempt to clarify the terminologies and models of this field by conducting a brief review of the existing work and suggesting an integrated conceptual framework for CSR, ESG, and sustainability in a domestic and global context. We suggest that externality and temporality are the drivers of this integrated framework.

We examine the spectrum of sustainability, corporate social responsibility (CSR), and environmental, social, and governance (ESG) databases, highlighting the variety of methodologies for generating ESG scores and their consequences for empirical finance research and investment strategy development. We begin by exploring the conceptual distinctions and overlaps among CSR, ESG, and sustainability initiatives, moving to address the challenges associated with measuring and applying these databases. We present a comparative analysis of these databases, which directly contribute to the discourse on sustainable finance. Furthermore, we acknowledge the prevalent challenges in ESG metric development, such as data availability, comparability issues, and the dynamic nature of ESG factors. Through our review, we find that, although there are efforts toward accurate representation, significant discrepancies exist in the extent to which these databases capture the complexities of CSR, ESG, and sustainability. We uncover a lack of comparability among these databases and the empirical studies leveraging them, which complicates the synthesis of research findings and the development of a coherent investment strategy based on these principles. The study advocates for future research to refine ESG scoring methodologies, improve metrics’ comparability across databases, and foster a more sustainable and responsible investment ecosystem.

Aggressive corporate practices have damaged the reputation of many firms and industries. While the media and the Internet improve stakeholder transparency and influence social expectations for responsible business, firms have found an increasing need to manage their corporate reputation. One-way firms have responded is by adopting voluntary corporate social responsibility (CSR) programs to live up to expectations set by the firm’s history, identity (core business), and image. However, conformance to evolving external isomorphic forces has encouraged many firms to adopt similar CSR programs without understanding their motives, resource constraints, and capabilities resulting in fragmented strategies and ineffective implementation approaches. The result has been inconclusive results in practice and inconsistent findings in extant literature on the link between CSR, corporate reputation, and financial performance. This chapter examines how the synthesis of stakeholder theory and resource-based view theory can provide tighter boundaries with corporate identity and shared value as the heart of a CSR strategy to direct top management’s resource allocation. The chapter introduces four CSR micro-strategies as a response to external forces based on a blend of two essential dimensions including internal authenticity and external legitimacy. The study examines the impact of authenticity, legitimacy, and the intensity of their interactions on corporate reputation of 107 publicly traded US firms. Through three models, the study found internal authenticity as the dominant dimension while external legitimacy contributed inconsistently to corporate reputation. Implications for CSR strategy suggest that CSR programs with higher authenticity levels improve corporate reputation consistently more than those focused on external legitimacy.

This study investigates business ethics (BE) practices in three East-Asian countries (China, Japan, and South Korea) through a questionnaire survey conducted in the years of 2014 and 2015. Specifically, ethical attitudes of employees working in major native companies in each mentioned country are studied. In detail, the study examines (1) respondents’ responsibility felt toward various stakeholder groups, (2) the existence of unethical practices in respondents’ industries, (3) respondents’ experience of ethical conflicts, (4) factors influencing ethical and unethical decisions, (5) respondents reactions to hypothetical situations involving ethical dilemmas, (6) institutionalization of BE in respondents’ companies, and (7) the change of ethical standards compared with ten years ago. We find that a number of similarities as well as differences exist regarding BE practices in the three countries, which can be partially attributed to different political, economic, and socio-cultural backgrounds. It can also be observed that in a number of cases, Chinese practices differ from those that are similar for Japan and Korea. This can be explained by the ongoing transition of Chinese economic system toward market economy and the fact that, compared with Japan and Korea, China is less economically developed, and the local business environment, including BE management, is less mature. This study significantly contributes to the existing literature on BE and has practical implications for any agents interested in ethical aspects on business environment in the investigated countries.

Encouraged by a variety of stakeholders and the benefits that could derive from corporate social responsibility (CSR), multinational corporations (MNCs) are increasingly concerned with limiting the social and environmental costs of their operations. Yet, they are often accused of not walking the talk on sustainability. Since offshoring and outsourcing became mainstream in international business, concerns have particularly emerged around MNCs’ ability to implement credible and efficient sustainability strategies along increasingly complex and dispersed global supply chains. Evidence on the effectiveness of private initiatives to socially and environmentally upgrade supplier practices remains mixed, and the different insights from the literature, siloed. This work aims to provide a survey of the literature documenting the challenges MNCs face trying to implement more sustainable policies in supplier networks located in developing countries, where sustainability standards and certifications are likely to be poorly enforced. We integrate insights from multiple disciplines, provide an overview of the existing body of research on the topic, and propose an analysis structured around three recurring themes: the policy tools available to MNCs and their limitations, the obstacles to suppliers’ compliance, and the different governance mechanisms available to MNCs to shape their suppliers’ practices. By providing a comprehensive picture of CSR policy implementation challenges, we contribute to practice and highlight potential avenues for future research.

Environment, social and governance (ESG) criteria are a quantum of a company’s performance in the environmental, social and governance aspects. A company’s worth may be determined not only by its earnings but also by its knowledge and sensitivity towards its stakeholders and society. The study aims to rank the companies and determine which company is superior based on ESG criteria. The authors employed the Technique for Order of Preference by Similarity to Ideal Solution (TOPSIS) in this study. The companies are ranked with this standardized method comprehending which company is the best taking into consideration the various environmental, social and governance factors. The authors have evaluated four companies in the electric utilities and IPPs industry. The results of the study rank these four companies on the basis of ESG criteria. Interestingly, the rankings calculated for ESG criteria are identical to the rankings calculated by a well-known ESG rating agency. To the best of author’s knowledge, this work is among the first to use the TOPSIS method to find rankings of the companies on the basis on ESG criteria. The work provides practical implications regarding convenient to use when finding ESG rankings for companies. This might be the most effective way for investors or other parties to learn which firm is the greatest for sustainable investing.

Regulators are starting to question what it means for an investment vehicle to be labelled environmental, social, and corporate governance (ESG). Also, retail climate-conscious investors have a right to have clear information on their investments. Here I analysed all the large equity exchange traded funds labelled as ESG available at the two largest investors in the world: Blackrock and Vanguard. For Blackrock, out of 82 funds analysed, only 9% did not invest in fossil fuel companies. Blackrock ESG funds include investments in Saudi Aramco, Gazprom or Shell. But they exclude ExxonMobil or BP. This suggests a best-in-class approach by the fund manager, picking only certain fossil fuel companies that they see as generating less harm. But it is unclear what the criteria used are. For Vanguard, funds listed as ESG did not contain fossil fuel investment. Yet this needs to be nuanced as information provided by Vanguard on investments is less transparent and Vanguard offers fewer ESG funds.

This study provides a bibliometric analysis of business literature on the interlinks of fintech, climate risks, and sustainable finance. Fintech growth promotes national environmental efficiency and green finance by decreasing carbon intensity toward the net-zero target. National fintech growth moderates the impact of environmental, social, and governance investment on bank efficiency. Fintech mitigates the loan bankruptcy risk imposed by climate risks with strict mortgage lending decisions due to climate concerns. Fintech applications in banking systems optimize financing costs and increase the accessibility of money for firms, decreasing corporate greenwashing behaviors and promoting green innovation. The existing literature leaves room for future studies on fintech to promote climate finance with important policies for climate action toward Sustainable Development Goals.

This article critically examines the recent opposition to environmental, social, and governance (ESG) initiatives, which have been increasingly scrutinized and politicized, particularly in the US. The article deals with the inherent political and economic tensions that challenge the adoption and effectiveness of ESG initiatives, highlighting the debate over shareholder versus stakeholder priorities and the broader implications for corporate social responsibility. The criticism of ESG is deeply rooted in the concerns over its impact on financial performance and perceived regulatory overreach, leading to a preference for maximizing shareholder value at the expense of broader societal goals. This chapter explores the potential future scenarios for ESG, considering the shifting landscape of sustainability in business practices amidst growing conservative resistance. This analysis is crucial for understanding the trajectory of sustainable finance and corporate contributions to environmental and social objectives in a polarized socio-political context.

This study assesses the impact of corporate engagement in sustainability and ethical practices on shareholder returns as defined by participation in the UN Global Compact Network Australia (UNGCNA). A dataset of 60 UNGCNA participating companies was compared to a similar set of 60 non-participating companies from the Australian Securities Exchange. The UNGCNA participating companies are also considered against the All-Ordinaries Index, which includes the top 500 listed companies in Australia, which is the country’s oldest market index and is often used as a benchmark. We analyse the growth in total enterprise value or market capitalization over three years. The findings reveal a significant positive differential in shareholder returns for UNGCNA participants against both comparison groups. Sustainable business practices may explain the differential or, more likely, these companies have an overarching management approach or style that sets them apart, and this approach includes the pursuit of sustainable performance.

In this chapter, we analyze the interplay between the traditional conception of corporate social responsibility (CSR) and international norms and initiatives to understand business engagement with the development agenda. Drawing on empirical evidence from 50 publicly listed companies, this article delineates the conditions under which CSR can play a constructive role in engaging with grand challenges, addressing development agenda and public policy gaps in a developing country, Türkiye. We defined and used four CSR dimensions to portray the companies’ response to the development agenda: integration with the core business, the extent of reach, instruments for implementation, and collaboration with external partners. Findings indicate that companies acting in line with the local conception of CSR by adopting a social mission beyond business display alignment of their CSR strategy with the global sustainable development agenda by adopting international norms and initiatives.

In this chapter, the utilization of Artificial Intelligence (AI) and Machine Learning (ML) tools, improved by human expertise, offers a detailed investigation into their transformative effects on Corporate Social Responsibility (CSR), Environmental, Social, and Governance (ESG) standards, and sustainability. Initial insights and structural foundations were developed using AI, specifically utilizing ChatGPT-4, with the author significantly enhancing the content through in-depth academic research and analysis. This synergistic approach provides a holistic view of AI and ML’s role in promoting ethical business practices, improving sustainability reporting efficiency, and facilitating informed decision-making within CSR and ESG frameworks. Incorporating extensively verified and expanded real-world examples, the work delves into the practical applications of these technologies and addresses the ethical considerations they raise. This collaboration highlights the evolving role of AI in research and emphasizes the critical importance of integrating AI-generated insights with scholarly research to drive forward sustainable and socially responsible corporate strategies and policies.

Motivated by the advancements in the discussions of environmental, social, and governance globally, this study aims to improve the knowledge of corporate sustainability motivations and engagement through a qualitative cross-company case study analysis of two consumer goods multinationals, Natura & Co. headquartered in Brazil, and The Coca-Cola Company, headquartered in the USA. The cases were chosen to compare the two companies’ corporate sustainable development (SD) motivations, one headquartered in an emerging and the other in a developed country. This study also assesses the balance between these corporations’ global and local sustainability agendas, comparing their worldwide engagement promises to their actual deliveries vis-à-vis national-institutional arrangements. As contributions to the field, comparing the cases surfaced valuable insights and additional theoretical abstractions on corporate sustainability, including proposing a new SD-engagement typology.