Based on China’s mandatory requirement for listed firms to implement online voting in their annual general shareholder meetings, we investigate whether and how minority shareholders influence corporate environmental performance (CEP). We use the difference-in-difference approach and find that the implementation of online voting promotes minority shareholders’ participation in shareholder meetings, which, in turn, leads to improved CEP of listed firms. We discover that “local pollution” exposure and “the increasing awareness of listed firms’ environmental risks” are the main motives of minority (...) shareholders concerning listed firms’ environmental performance. Furthermore, we find that the minority shareholders improve CEP of listed firms through influencing groups with greater bargaining power. (shrink)

This paper examines organizational use of the United Nations’ Sustainable Development Goals (SDGs) and why private organizations are using multi-stakeholder SDG platforms as a strategic tool for achieving the goals. Whereas the SDGs’ predecessors, the Millennium Development Goals (MDGs), were specifically formulated for governmental adoption, the SDGs stand apart in inviting diverse stakeholders, including private industry, to participate in sustainable development. Literature is emerging about how private industry can engage in the SDG framework. We aim to contribute to the sustainability (...) and cross-sector partnership literatures by examining the motivations of organizations that partner into SDG platforms. This research started as an exploratory study to understand how corporations use the SDGs strategically, and we identified platforms as a means of strategic corporate engagement with the SDGs. Our findings are based on semi-structured interviews and documents, and they focus on four Danish SDG platforms: UNLEASH, Hello Science, Fra Filantropi til Forretning (From Philanthropy to Business), and the SDG Accelerator. The findings suggest that speed, impact, and scaling of SDG innovations are features of SDG platforms that motivate cross-sector, boundary-spanning collaboration. We suggest that the larger ambition of the platforms is to shift the value framing from profit outputs to SDG impacts and outcomes, ultimately imagined as a business landscape based on SDG innovation; and we propose a model to reflect the SDG platform process structure. (shrink)

The role of sustainable development in the export intensity of small and medium-size enterprises represents an open research question. We consider sustainable development through the environmental, social, and governance dimensions as well as via firms’ innovative activity indicators. Our objective is to reveal the sustainability determinants of export intensity of SMEs in emerging markets subject to financial constraints, which is one of the major obstacles for SMEs. Our sample is based on the 2018–2020 Business Environment Enterprise Performance Survey data. The (...) Heckman model allows us to reveal the factors relevant for SMEs to gain access to foreign markets under the control of financial constraints specific for SMEs. We also analyze the determinants of the SMEs’ share of direct exports in revenue. Our results demonstrate that innovative activity and corporate social responsibility facilitate entry to foreign markets, while equity concentration is a major deterrent. In particular, we reveal a significant positive effect of research and development investment on export intensity. Our findings highlight the complex nature of the interrelations between the SMEs’ share of direct exports in revenue and ESG consciousness. We find that other significant factors are political links of the top management, the gender composition of production and administrative units, employee training facilities, and ownership structure. (shrink)

Although legitimacy theory provides strong arguments that environmental, social and governance disclosure and performance can help mitigate firm-specific risks, this relationship has been repeatedly challenged by conceptual arguments, such as ‘transparency fallacy’ or ‘impression management’, and mixed empirical evidence. Therefore, we investigate this relationship in the revelatory case of initial public offerings, which represent the first sale of common stock to the wider public. IPOs are characterised by strong information asymmetry between firm insiders and society, while at the same time (...) suffering from uncertainty in firm legitimacy, culminating in amplified financial risks for both issuers and investors in aftermarket trading. Using data from the United States, we demonstrate that voluntary ESG disclosure reduces idiosyncratic volatility and downside tail risk and higher ESG ratings have lower associated firm-specific volatility and downside tail risk during the first year of trading in the aftermarket. We provide theoretical arguments for the relationships observed, suggesting that companies striving for ESG performance and communicating their efforts signal their compliance with sustainability-related norms, thus acquiring and upholding a societal license to operate. ESG performance and disclosure help companies build their reputation capital with investors after going public. We also report that ESG disclosure is a more consistent proxy for ex-ante uncertainty as an indicator of aftermarket risk, thereby replacing some of the more conventional measures, such as firm age, offered in the existing literature. (shrink)

As implied by executive job demands theory, intensified job demands of a firm’s top executives limit their cognitive capacity and centralize the locus of decision-making, which may undermine corporate sustainability performance. The current study tests this effect, along with the impact of two contextual factors, to reveal that the negative influence of executive job demands is weaker if firms feature greater functional diversity and average tenure in their top management teams. In an extension of upper echelon theory, this study also (...) outlines the influence of task challenges that confront strategic leaders on corporate sustainability performance. (shrink)

While a growing number of firms are being evaluated on environment, social and governance criteria by sustainability rating agencies, 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. (shrink)

This article investigates whether sustainability labels for mutual funds in Europe provide consistent signals regarding funds’ sustainable characteristics. Specifically, we assess the alignment of signals conveyed by third-party and self-declared labels. Among the first typology, we consider labels sponsored by government and nonprofit organizations (GNPOs) alongside Environmental, Social, and Governance (ESG) ratings from commercial data vendors. The latter category includes the Sustainable Finance Disclosure Regulation (SFDR) classification and an ESG-related name. Our findings indicate that equity funds with GNPO labels are (...) more likely to exhibit top-tier ESG ratings and alignment with self-declared sustainability signals, namely Article 9 of SFDR and fund names. Furthermore, holding government and multiple GNPO labels is linked to other signals indicating higher sustainability standards. In addition, funds tend to experience an improvement in Morningstar globes after receiving a GNPO label, consistent with GNPO labels signaling funds of the high-quality type. The results regarding label alignment in fixed-income funds are less conclusive. Our findings underscore the need for credible signals in view of the growing number of sustainability labels available to investors. (shrink)