Journal of Business Ethics 171 (2):379-397 (2020)
AbstractWhile 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.
Similar books and articles
How Sustainability Ratings Might Deter 'Greenwashing': A Closer Look at Ethical Corporate Communication. [REVIEW]Béatrice Parguel, Florence Benoît-Moreau & Fabrice Larceneux - 2011 - Journal of Business Ethics 102 (1):15-28.
Effectiveness of the KLD Social Ratings as a Measure of Workforce Diversity and Corporate Governance.Jingoo Kang - 2015 - Business and Society 54 (5):599-631.
Social Responsibility Ratings and Corporate Responses to Activist Shareholder Resolutions: Is There a Relationship?Jeanne M. Logsdon, Harry van Buren Iii & Kathleen Rehbein - 2008 - Proceedings of the International Association for Business and Society 19:307-317.
Social Responsibility Ratings and Corporate Responses to Activist Shareholder Resolutions: Is There a Relationship?Jeanne M. Logsdon, Harry Van Buren Iii & Kathleen Rehbein - 2008 - Proceedings of the International Association for Business and Society 19:307-317.
The Influence of Firm Size on the ESG Score: Corporate Sustainability Ratings Under Review.Samuel Drempetic, Christian Klein & Bernhard Zwergel - 2020 - Journal of Business Ethics 167 (2):333-360.
CSR Rating Agencies: What is Their Global Impact?Steven Scalet & Thomas F. Kelly - 2010 - Journal of Business Ethics 94 (1):69-88.
The Primary Importance of Corporate Social Responsibility and Ethicality in Corporate Reputation: An Empirical Study.Bruno Dyck Kent Walker - 2014 - Business and Society Review 119 (1):147-174.
Determinants of Corporate Social Responsibility Disclosure Ratings by Spanish Listed Firms.Carmelo Reverte - 2009 - Journal of Business Ethics 88 (2):351-366.
Corporate Governance Quality and CSR Disclosures.MuiChing Carina Chan, John Watson & David Woodliff - 2014 - Journal of Business Ethics 125 (1):1-15.
Sustainability Ratings and the Disciplinary Power of the Ideology of Numbers.Mohamed Chelli & Yves Gendron - 2013 - Journal of Business Ethics 112 (2):187-203.
Professors on the Board: Do They Contribute to Society Outside the Classroom?Charles H. Cho, Jay Heon Jung, Byungjin Kwak, Jaywon Lee & Choong-Yuel Yoo - 2017 - Journal of Business Ethics 141 (2):393-409.
Governance and Social Information Disclosure Evidence From the UK.Sepideh Parsa, Reza Kouhy & Christos Tzovas - 2007 - International Journal of Business Governance and Ethics 3 (3):205-222.
Environmental and Economic Dimensions of Sustainability and Price Effects on Consumer Responses.Sungchul Choi & Alex Ng - 2011 - Journal of Business Ethics 104 (2):269-282.
Green Governance: Boards of Directors’ Composition and Environmental Corporate Social Responsibility.Corinne Post - 2011 - Business and Society 50 (1):189-223.
A Bi-Directional Examination of the Relationship Between Corporate Social Responsibility Ratings and Company Financial Performance in the European Context.Bertrand P. Quéré, Geneviève Nouyrigat & C. Richard Baker - 2018 - Journal of Business Ethics 148 (3):527-544.
Added to PP
Historical graph of downloads
Citations of this work
The Mechanisms of Chief Executive Officer Characteristics and Corporate Social Responsibility Reporting: Evidence From Chinese-Listed Firms.Xingxin Zhao, Min Wang, Xinrui Zhan & Yunqing Liu - 2022 - Frontiers in Psychology 13.
Volatility Risk Premium, Return Predictability, and ESG Sentiment: Evidence From China’s Spots and Options’ Markets.Zhaohua Liu, Susheng Wang, Siyi Liu, Haixu Yu & He Wang - 2022 - Complexity 2022:1-14.
Exploring the Effectiveness of Sustainability Measurement: Which ESG Metrics Will Survive COVID-19?Jill Atkins, Federica Doni, Andrea Gasperini, Sonia Artuso, Ilaria La Torre & Lorena Sorrentino - forthcoming - Journal of Business Ethics:1-18.
References found in this work
Business Ethics: Managing Corporate Citizenship and Sustainability in the Age of Globalization.Andrew Crane - 2007 - Oxford University Press.
The Audit Society: Rituals of Verification.Michael Power - 1999 - British Journal of Educational Studies 47 (1):92-94.
CSR Strategies of SMEs and Large Firms. Evidence From Italy.Francesco Perrini, Angeloantonio Russo & Antonio Tencati - 2007 - Journal of Business Ethics 74 (3):285-300.
Mandatory Non-Financial Disclosure and Its Influence on CSR: An International Comparison.Gregory Jackson, Julia Bartosch, Emma Avetisyan, Daniel Kinderman & Jette Steen Knudsen - 2020 - Journal of Business Ethics 162 (2):323-342.
Value-Enhancing Capabilities of CSR: A Brief Review of Contemporary Literature.Mahfuja Malik - 2015 - Journal of Business Ethics 127 (2):419-438.