Does Sustainability Matter for Corporate Performance and Economic Development ? Based on the Asia Pacific and North America

This paper explores how the sustainable investment impacts financial returns and economic development in of Asia Pacific and North America, utilizing real data empirically. In academia and industrial field, it is polemical that indeed, the sustainable behavior has economic returns. In order to clarify that, we tested hypotheses with an analysis of seven stock markets, accounting of rates such as ROI, ROIC, and ROA in eleven companies, and GDP/GNI per capita. The results indicate that both financial return and economic development are positively germane to the sustainable investment. Besides, the variance of sustainability to economic development exists, depending on GDP per capita between two regions. We conclude, concerning the sustainability, by corroborating micro perspective for corporate level and macro perspective of economic development in the private and public sector. This research consequence will be interested in both practitioners and researchers in the measurement of sustainability performance.


Introduction
An issue of sustainability has emerged from several decades.The sustainable management matters because companies want to get competitive advantages over the future, using their resources efficiently in the saturated or competitive markets.A big reason why it was caused is due to the climate change.We trace back to why it became as an important agenda before we discuss concerning sustainable management.According to EPA(Environmental Protection Agency) 2016 report, it denotes that three cardinal factors, both natural and human, can cause the climate changes in earth's energy balance including; 1) variations in the sun's energy reaching earth; 2) changes in the reflectivity of earth's atmosphere and surface; 3) changes in the greenhouse effect, which affects the amount of heat, retained by earth's atmosphere.These three are authentic evidence from scientists.IPCC (2013) reports that they have pieced together a record of earth's climate, dating back hundreds of thousands of years and in some cases, millions or hundreds of million years, by analyzing a number of indirect measures of climate such as ice cores tree rings, glacier lengths, pollen remains, and ocean sediments, and by studying changes in earth's orbit around the sun.
Being following that everything is changing because of the climate change including technological development, everyone knows and recognizes that industrial revolution has destroyed the environment, even though our lives have been comfortable.UNEP FI [79] report says that the activities of the world's 3,000 biggest companies estimate on third of profits would be lost if firms were forced to pay for use, loss, and damage to the environment as well as world's top firms cause $2.15 trillion of environmental damage.As mentioned above, if many companies do not protect the environmental issues in which climate change, water scarcity, food security and deforestation have emerged, they are not able to obtain sustainable competitive advantages such as getting various scenarios for future.The corporate sustainability is becoming significant as mainstream for now and future's growth engine.In the theoretical and empirical research papers, it demonstrated that why companies do need the sustainable strategy because there was positive relationship between sustainable management and financial returns as evidence by [16,39,48,49,75].
Previously on literature review, measuring sustainability was like a conundrum because it has two characteristics.Firstly, the sustainability has a long term figure [16].Measuring performance about sustainable activities needs many times with the precise data.It means previous works have not been timely and infelicitous.Sustainable performance is analogous to build up for enterprise strategies, forecasting multiple scenarios in the long-term period.For here, it is opaque that long-term cannot be calculated precisely.In the stock market, similarly, there is a calculation method for sustainable growth rates of companies using accounting of rates such as financial statements.Through various measuring tools like financial or predictive modeling based on demand forecast, we can figure it out.To differentiate the former works, this research analyzes the financial data and stock price of companies in comparison with sustainability index by time series method.Secondly, according to European Commission's report [22], it is murky that almost all sustainable assessment studies end up comparing different alternative scenarios with the evaluation trying to individuate which alternative way leads to a more sustainable development.It is very obscure to evaluate how much certain products, policy or institution can contribute to its fulfillment.Therefore, this paper shows empirical evidence, surmounting two characteristics as noted above.In order to do that, we explore the empirical data from a historical and authentic institution with industry issues.Plus, we reckon the analyses on as-is and future of the sustainability are crucial to overcoming its uncertainty by portraying prediction model.

Figure 1. Climate change vulnerability index
Figure 1 indicates vulnerability of climate change throughout the world.As elucidated about climate change, it is the global mega forces that impact all others such as water scarcity, energy and fuel, deforestation and ecosystem decline directly.Our paper focuses on North America and Asia Pacific region.There are two reasons why we picked.The first one is a deficiency of data for Africa where climate change is highly susceptible.The second one is that Asia Pacific is the second vulnerable region in climate change of sustainability.So this region will be compared by well-performed region such North America.
Our salient research question is how well companies operate sustainable management by climate change and why companies need the competitive advantage from it.Here we examine the empirical analysis that the relationship between investment in sustainability and economic and financial is inevitable regarding utilizing stock indices and DJSI, which is based on an analysis of corporate economic, environmental and social performance, assessing issues such as corporate governance, risk management, climate change mitigation, supply chain standards and labor practices by utilizing theories of investment, and development economics.The contribution of this paper is why many companies need the sustainable management like managerial implications by analyzing empirical data.We also show academic implications that the firm's capacity, having the sustainability and corporate performance, has the competitive advantages against no evidence between economic returns and sustainability.

Definitions of Sustainability in previous literatures
With respect to the sustainability, people tend to think that sustainable management is an environmentalism.It, however, is the wrong assumption.Traditionally, it is not only the managerial influence on balance including economic, environmental and social issues but also the management technique with financial and non-financial performance such as total sales, net profit, and ethnic, environmental and social problems.That is what people call corporate social responsibility, ethnic or stakeholder management.In the former works about sustainable management, it has been denoted as eclectic definitions.For example, Dyllick and Hockerts [19] have declined corporate sustainability as: "meeting the needs of the firm's direct and indirect stakeholders(such as shareholders, employees, clients, pressure groups, communities, etc.,.) without compromising its ability to meet future stakeholders needs as well".Marrwijk [45] explained that corporate sustainability refers to "demonstrating the inclusion of social and environmental concerns in business operations and interactions with stakeholders".Like many others, these definitions build on stakeholder theory, which is one of the most widely applied theoretical frameworks for research on corporate sustainability written by [60].
Gray [26] states that sustainability is as the systems based conceptualize it as anything below planetary and species level.A simple assessment of the relationship between a single organization and planetary sustainability is virtually impossible [4].Bradbury [8] defines that sustainability, the creation of "organizations that can sustain financial, human-social and environmental resources over the long-term" is becoming a critical area that warrants systematic investigation.Crowther and Aras [13] argue that sustainability is based upon efficiency in the transformation process and equity in the distributive effects.The World Commission on Environment and Development have manifested the sustainability as the ability to "meet the needs of the present without compromising the ability of future generations to respond to their needs."In fact, being sustainable is now becoming a source of competitive advantage and a matter of corporate survival rather than a costly inconvenience.A process of sustainability facilitates to create a vibrant economy and a better quality of life while respecting the need to sustain natural resources and protect the environment.It can express as the principle that future generations should live in a world that the present generation has enjoyed but not diminished.To sum up, most of proposed definitions state that corporate sustainability subsumes the variety of aspects that need to be considered simultaneously and is often clustered into three main sub-groups; Environmental (E), Social (S), and Governance (G), like systematic concept, associating with the continuity of economic, social, institutional and environmental perspectives of human society [79].Hence, in this paper, we define as the ESG that is a catch-all term for measuring corporate sustainability.

The Sustainability and Corporate Performance on Investment Theory
It is controversial that the relationship between financial or economic returns and sustainable behavior is positive or negative.There are several kinds of literature having no correlation between them.Margolis and Walsh [42], found no evidence that embracing sustainability increases profitability.The work of Palmer and Siebert suggested that as the environment and natural resources are the main production factors, imposing limitations on them will increase costs and limit the firm's ability to grow written by [69,74].Hansen et al. [30] indicated that the relationship between a comprehensive set of social and environmental indicators and financial performance over the previous two years for 1,100 CEOs had no correlation between them.Neoclassical economists often base their arguments on the shareholder theory, stating that the only social responsibility of business is to increase profits and that doing otherwise, such as investing resources in costly sustainability initiatives, will necessarily reduce shareholder value by Friedman [23].
The most important thing is that people who are making the policies recognize sustainable management like environmentally utilizing resources is the nugatory investment since they think it is only for future, not in the present as well as not physical consequences immediately.There is the evidence that the Boston Consulting Group [10] had surveyed to 1,500 corporate executives and managers from companies individually throughout the world.It came up with the results that more than 70 percent of survey respondents showed their company had not developed a clear business case for sustainability and selfidentified experts in sustainability believed more strongly in the importance of engaging with suppliers across the value chain.In addition to that, sixty-two percent of these respondents considered it necessary to hold providers to specific sustainability criteria.Of course, only this research does not mean why the sustainable management is significant in whole industries.
Albeit recent papers suggest that these kinds of sustainability investments can augment beneficial performance such as financial returns, other work continues to find a correlation between financial returns and investments in sustainability by Rebecca [55].The management of sustainability performance requires a sound management framework which firstly links environmental and social management with the business, competitive strategy and management and, secondly, that integrates environmental and social information with economic business information and sustainability reporting written by Schaltegger and Wagner [61].Galema, Plantinga, and Scholtens [24] corroborated a theory that socially responsible investing influences on stock returns by lowering the book to market ratio and not by generating positive alphas.Research on corporate sustainability has shown deference to business orthodoxy as scholars strive to prove the business case for sustainability, and in doing so fit it into the dominant beliefs embedded within business literature by [2,32,46,59].
Fundamentally, we reckon that corporate performance comes from many and various factors.Among them, the overarching cause can be as the investments for accretion of firms through institutional investors.According to U.S. Securities and Exchange Commission, the growth in the proportion of assets managed by institutional investors has been accompanied by a dramatic increase in the market capitalization of U.S. listed companies.For example, in 1950, the combined market value of all stocks listed on the New York Stock Exchange (NYSE) was about $94 billion.By 2012, however, the domestic market capitalization of the NYSE was more than $14 trillion, an increase of nearly 1,500 %.This growth is even more impressive if you add the $4.5 trillion in market capitalization on the NASDAQ market, which did not exist until 1971.As mentioned for institutional investors above, why do they invest a lot of money to company's stock?The answer to a question is indubitable that they want to get money back as much as they invested and to obtain savings.Plus, in another aspect, many companies need the investments from them as well due to a reason why in general, the business expansion for the future accrues the competitive advantages of their own eventually.In the investment theory, there are two motivations for the investment.Goetzmann [27] addressed that motivation of the investment is the desire to increase wealth (i.e.make money grow).Another one is the desire to pass money from the present into the future.People and organizations anticipate future cash needs and expect that their earnings in the future will not meet those needs.
In order to prove the relation between sustainability investments and financial performance, we utilize ROI(Return On Investment), ROIC(Return On Invested Capital), and ROA(Return On Asset).These financial statements are the overarching factors to evaluate company's financial performance measures and investment returns.There is evidence that firms have begun to monitor and track some of these measures through internal cost-benefit analyses and activity-based costing [47,66].Basically, ROI shows how companies invest efficiently, and the value of ROIC subsumes not only the firm earns the cost of capital but also how much they invest.ROA denotes how efficiently firm yields the income using its assets.We reckon that the firms, are with accounting rates of return such as ROA, ROI, and ROIC, have better performance than the firms that are not doing sustainability.In the previous work of accounting rates and sustainability, Robert et al. [56] corroborated that the performance between high sustainability companies and low sustainability companies was different in long-term by comparing samples of 180 US firms.The results showed that high sustainability companies were significantly outperformed over the long-term, using variables such as ROE, ROA, stakeholder engagement, the disclosure of nonfinancial information, and governance.In this work we concentrate on ROI, ROIC, and ROA, differentiating former works because they are reasonable when evaluating revenues based on an amount invested not a sales account.This point can reduce the distortion that an index like total sales has extensive benefit rates including ROA, ROE.In other words, if we use the ROIC in a company, we will see purely benefit rates based on how much we invest.
In this regard, becoming that the environmental investment is significant, this sector requires a lot of money because we are not able to ameliorate better environment developing economic status without it.According to World Bank report [80], it turned out that the total projected energy sector investment requirements for the region over the next 20-25 years are enormous.They amount to about $3.3 trillion (in 2008 dollars), some 3 percent of accumulated GDP during that period.As mentioned above, previous research for the relation between financial returns and the sustainability has been corroborated positively although there was an argument in which several types of research showed no evidence and findings.What we are going to underline is to find their causality, but not a correlation between them.Corporate investment in the sustainability is to determine valuable values for the future's competitive advantages as well as by augmenting the present value of a company such as economic benefits; financial performance will be increased.Accordingly, we hypothesize the positive causality between stock investment and sustainability: Hypothesis 1: The causality between the sustainability and financial returns will be positively associated with firm's present and future values.
Hypothesis 1-1: Major capital flows of a stock market in both North America and Asia Pacific area will have a positive relationship with sustainable investment.
Hypothesis 1-2: Firm's stock prices, which are on sustainable management in both North America and Asia Pacific area will be positively associated with the sustainable investment.
Hypothesis 1-3: Firm's accounting of rates with ROI, ROIC, and ROA will be positively associated with sustainability investments.

Regional Differences of Sustainability Performance on Economic Development Theory
The prominent norm of the sustainability performance among countries depends on two situations at which we focused on our paper, even though there are many standards to appraise the sustainability performance.The first one is how much the money has been invested in the industries of its country.Another one is how well the countries have been burgeoned economically, purporting that ESG (Environment, Social, and Governance) is embraced.Asia is not only to be faced with the environmental problems of air pollution, water management, and land degradation but also to have wicked problems meaning there are many brittle nature circumstances.In the last decades, East Asia-Pacific such as China has been burgeoned even though there have been precarious situations economically.Coxhead [14] verified the analysis on the features of the relationship between economic growth and environmental resources in different parts of the region.Zhang [77] contemplated environmental degradation due to burgeoning energy demand across Asia and recommended several policies to address the increasing prominence of this issue as economic expansion continues.There is the other research concerning the relevance of the regional economy and environmental issues.Bawa et al. [7] explored the competitive use of resources by India and the PRC, the need for inter-state cooperation over environmental issues, and the impact of these major players in the broader region.In figure 2, what they have in common is that the each rate of greenhouse gases, water abstraction, and pollutants in Asia takes possession that is the most substantial proportion in these charts.Especially East-Asia has been in high economic growth rate throughout the world from 2006 to now as well as a lot of environmental capital is flowing in.There is evidence that in 2014 notably, buyout-backed exists in Asia-Pacific markets shot up to nearly $53 billion, a 120% increase by [6].
In all, Asia-Pacific exits topped $105 billion meaning that this percentage is the largest figure compared by North America (34%) and Europe (50%).Figure 2 shows us that in environmental problems such as greenhouse gas, water abstraction, and pollutants, both Asia and North America have huge proportion.Why do two regions have environmentally maladies?Estimating differences in economic growth rates, population, and GDP indicates that how well each nation experiences the economic development.This paper concentrates on the role of sustainability, generating that regional disparity exists in economic development.
What is the development?There are a lot of definition about it, but we make it simple using Sumner and Tribe's [72] words.They defined as three categories; 1) short to medium term outcome of attractive targets, 2) long-term process of structural societal transformation, 3) a dominant discourse of western modernity.The development we referred to the literature review above looks analogous with the sustainability as we discussed in the previous section.Yes, this point we assume is the final goal for our research which means the sustainability has the tremendous importance of economic development.To do that, we need to look for its attributes like what factors are germane to causality between them.Albeit there is a difference depending on the subject of pioneering researchers such as Smith, Marx, Schumpeter, Lewis, and Rostow in many former types of research for the economic development, we found the properties approaching the theory of economic development in Table 1.Our research, however, underscores whole theories regardless of that each time in development economics has leading models.What it means that even if we utilize the prevailing theory in advanced sequences, new growth theories have been failed with the method of coordination such as government intervention and underdevelopment.▪ Communism; social or public ownership of property, and independence of foreign capital and goods Marx [43] ▪ Technology; business cycles, innovation, socialism Schumpeter [70] Classical Theories ▪ Linear Stage Growth Model Rostow [58], Harrod [29], Domar [18] ▪ Structural Change Model Lewis [50], Chenery [12] ▪ International Dependence Model Singer [65], Baran [9] ▪ Neoclassical Counter Revolution Model Stiglitz [68] Contemporary Theories ▪ New Growth Model; knowledge, role of public sector and investment Aghion [3], Sen [63] The goal of economic development in its simplest form is to improve the quality of life and to be sustainable development as well as the most significant thing is to bring about the growth such as gross income per capita.Before the 1970s, rapid economic growth has been considered a good proxy for other attributes of development [76].There are many ways to evaluate the economic development.In our paper, we concentrate on GNP and GDP which have properties to elucidate the importance of sustainability and economic development empirically.Giang and Sui [25] demonstrated that financial performance is measured by an annual increase in gross national product (GNP) and World Bank estimates it as GNI per capita.Also, Caroll and Stanfiled [11] utilized the factor like stock price and GDP substantiating that regional development design generates sustainable economic development.In comparison with previous research, there was no multi-faceted sustainability performance regionally and empirically while what we distinguish is by two instructions using both stock prices into local investment and GNP/GDP.In summary, regional difference and the link between sustainability and economic development leads directly to our second hypothesis: Hypothesis 2: The sustainability will exist the regional differences of economic development between Asia-Pacific and North America.
Hypothesis 2-1: The gross national income (GNI) and gross domestic product (GDP) that are overarching factors for economic development will be positively associated with sustainability investment in each region.
Hypothesis 2-2: Each region between Asia-Pacific and North America will have the different level of variance for sustainability's index.

METHODS
VAR Properties.Our goal is to figure out for the causality among the sustainability performance, financial returns, and economic development.To do this, we require using VAR (Vector Autoregressive), model.In the former researches, it has been utilized for analyses such as financial data, stock prices/returns, and money supply by [40,51,52,].The VAR model in economics has made popular by Sims [64].Especially it is proven to be useful for describing the dynamic behaviors of economics and financial time series and for forecasting as well as it has been known as the model from univariate autoregressive to multivariate autoregressive frequently using for projection and efficiency analysis by the change of endogenous variables.Zivot and Wang [78] indicated that the VAR model is used for structural inference and policy analysis.In structural analysis, certain assumptions about the causal structure of the data under investigation are imposed, and the resulting causal impacts of unexpected shocks or innovations to specified variables on the variables in the model are summarized.Utilizing VAR model that a change of any one variable can be determined by an endogenous variable in the dynamic response, our goal concentrates on the causality, not a correlation between investing sustainability and financial returns.There is a difference about between time-series and cross-sectional data.Based on the stationarity of variable, time series analysis satisfies its assumption and has the efficiency.When their variables have nonstationarity, they have to be eradicated for detrending before estimating a specific VAR model.The first thing we do is to employ the Augmented Dickey-Fuller (ADF) and Phillips-Person (PP) unit root tests for the multivariate approach of Johansen and Juselius [35].After ADF test, if the variable is non-stationary, we have to treat the first difference of variable indicating that non-stationary variable modifies into being stationary.Then, given nature of results, we can make a decision selecting the lag length.As denoted in Table 2, our paper is embraced in 'multivariate' analyzing our hypotheses by VAR and VECM.Why we choose this VAR model is that first, it is lucid the impulse response analysis attests a change of one variable in endogenous variable influencing dynamic effects.Secondly, through the variance decomposition, we can analyze the size of the contribution of these variables to the total variation in each endogenous variation.What it means is that VAR does not settle on the hypothesis by economic theory but analyzes real economy using given economic time series.In other words, it makes systematic outputs utilizing parallax variable like an explanatory variable to all variables.Modeling and Data.In order to clarify the relationship between sustainability performance, financial returns, and economic development, we have garnered the variables such as the data of stock market regionally, each firm's stock price, macro economy factors.Many types of research have demonstrated the relation among stock market, stock returns, and specific economic variables by [5,17,31,38,41,73].This paper has difference contributions in comparison with them.First, it extends regional stock markets in Asia-Pacific and North America including a particular topic, the sustainability performance empirically.The only conceptual 'buildup' was operated a lot because it is demanding to gather real data as well as the hardship exists to measure quantitatively.Hence, we settle on a variable of sustainability performance by DJSI (Dow Jones Sustainability Index) which is factual data.Its conceptual definition is analogous to what we define in Section 2.1.
In comparison with previous works, which is based on empirical methodology, our work differentiates approaching macro and micro perspectives by using representative stock indices in Asia and North America as well as individual firm's stock prices.How we proceed 'the step by step' for hypothesis 1 is through two approaches; 1) selecting capital flows of major stock markets such as Nikkei 225, Shanghai-Shenzhen, KOSPI, AUS 200, and Hong Kong Hansen of Asia-Pacific and NASDAQ, S&P 500 of North America respectively.These are all responsible for handling and organizing the investment in each region; 2) constituting stock prices of top 5 sustainability companies of DJSI regionally; 3) using the variables of accounting of rates such as ROI, ROIC, and ROA from a financial corporation, 'Five Tree.' Hypothesis 2 portrays the causality between sustainability performance and economic development by GDP per capita and GNI per capita.To avert the multicollinearity, it requires other variables because depending on the population, especially the values of GDP and GNI can be a discrepancy in which two predictors in multiple regression models are highly correlated indicating that one variable may be linearly predicted from the others with an equivalent degree of accuracy.We focus on GNI and GDP as mentioned in theory building of the last section, albeit macro economy has many indicators like money supply, CPI, and un/employment.The time setting for hypothesis 2 is from 1998 to 2016 because economic development is not 'fleeting innovation,' while hypothesis 1 which is germane to the sustainability settles on 2010 through 2016.Plus, all variables were modified to logarithms to set up the normal distribution at which regression equation is stable.
When the time series variables have stationarity, the first model of time series we can consider is the ARIMA.However, that has the limited option in which they utilize only the information related to their past.In order generally to observe the relationship between each variable, ARIMA model has some limitations that do not consider with additional information such as factors.Therefore, we need to add the other variables influencing on the dependent variable.By adding vectors , AR model treats scalar variable, while VAR model deals with a vector which means dependent and explanatory variable.Hypothesis 1 construes the causality between sustainability performance and economic value, especially financial returns.To do so, we use the VAR basic model in (1)


It is possible that VAR analysis can be applied for dummy variables [54].We define the dummy variable as zero and one (0, 1).When the GNI and GDP have the over value compared to an average value in each time, the value is one, 1.Otherwise, zero, 0. As mentioned in Figure 4, we set another dummy variable such as GR (Great Recession) from 2008 to 2009 as their variables need to get the shock mitigation not influencing on the other variables.
Preliminary Analysis: ADF and KPSS Test.In order to verify the stationarity of VAR model, we employ the ADF and KPSS analysis of unit root test individually.The estimation of ADF test is in (3), and a null hypothesis is H0 :  =0.We assume that if a null hypothesis cannot reject, the unit root exists.
Showing the consequences of ADF and KPSS test in Figure 6, we reject a null hypothesis meaning that unit root exists.However, after first difference in KPSS test, all variables have the stationarity.In this regard, Eagle and Granger [21] substantiated that even if there is the change of trend in individual economic time series to abnormal set (or unstable) and if the linear combination having stationary time series in the long term exists, the linear combination becomes stationary time series variable.In other words, these time series variables are in a co -integrating relationship.However, it has the deficiency when the co-integrating vector is two more or over.So Johansen [36] found that when variables are non-stationary, it is possible to modify the alternatives such as vector error correction model (VECM) after performing the co-integration test.As we settle on not only a standard of time series analysis in Figure 4, but also literature review as mentioned above, the remainder of variables is operated by vector error correction model (VECM) except for log(ND), log(NTD), and log(AP_GDP).To lay the groundwork for VECM, we operate the co-integration test such as Johansen test before (See Appendix).

Results
According to the result of hypothesis 1-1, using VECM in daily data from 2010 to 2015, the sustainability performance in Asia Pacific is positively associated with Asia major stock markets such as AUS (<0.00001),SS (0.07), KP (0.007) in Table 5.The rest, NK, and HKH, however, are not significant with sustainability total returns.A determinant of variable stationarity, eigenvectors are 0.05, 0.03, 0.02, 0.01, 0.008, and 0.005 indicating that they are stationary, le ss than one, '1'(See the Appendix).In North America, the consequences of VECM show that ND and SP have highly strong relation with sustainability performance.Albeit many companies are registered in ND and SP respectively, they are pertinent to the investment and financial returns like economic values.That is a crucial reason why this research determines vector autoregressive analysis instead of correlation between them.Their eigenvectors are stationary.In other words, this VECM is stable.In order to verify the relation between sustainability performance and financial returns, we estimate the causality with specific variables for hypothesis 1 -2.Table 7 and 8 present that the most of top 5 companies, which have the efflorescence on sustainability in each region, are germane to financial returns.Of course, statistically several companies such as SE, TM, SH, and WB in Asia Pacific, also for AI, JJ, and VZ in North America, are not significant but as seen in Table 9, AP, TM, SH, and WB are all significant with sustainability total returns after individual VECM analysis by putting them to endogenous variables.That is because, in one of the properties in VAR, it is not necessary to worry which variable is the endogenous variable and which is the exogenous variable [37].The remainders of independent variables, AI, JJ, and VZ do not have the significance against sustainability total returns after even analyzing individual VECM.For here, there is an implication that we need to categorize by industry and then to figure out for why these companies have the significance through an in-depth case study.
Causalities among the variables are shown in Table 10.The hypothesis 1 -3 is substantiated.In North America and Asia Pacific area, the financial earns of investment are germane to sustainable management in their firms.All p-values in ROI, ROIC, and ROA are significant.Besides, adjusted R-squared values meaning explanatory power between variables are high in Asia Pacific area especially.As mentioned for using ROI and ROIC, these results indicate that there are causalities between the efficiency of investment and sustainable management.It assumes carefully that high sustainable management will be outperformed in comparison with not doing sustainable management.We accentuate that sustainable management encompasses all of the corporate processes.To preser ve the environment, the firms have not only to develop technologies using their core competencies but also to take the contribution to society; they try to solve the poverty as volunteers, donating one part of their revenues.Plus, by taking organizational governance, the firms let investors know that a company uses accurate and transparent accounting methodologies, and also they help them to see that common stockholders are allowed to vote on significant issues.As a long literature has suggested for the relation between macro-economy variables and economic growth, our paper has the characteristics analyzing real and authentic data of sustainability, firm's accounting of rates, and macro-economy variable like GDP per capita and GNI per capita.As a result, Table 11 shows that it is manifest that GDP(0.05915) and GNI (0.03319) are significant with the sustainability total returns in Asia Pacific as well as eigenvalues are stationary, less than '1'(See Appendix).North America's consequences of GDP and GNI against the sustainability are 0.00088 and 0.0285 respectively.
To test hypothesis 2-2, we use forecast error variance decomposition.The difference between regions exists precisely.Asia Pacific, for example, has the proportion that after the 15th quarters, sustainability variance explains 65.59%.Meanwhile, GDP and the population of variance contri bute to sustainability with 9.86% and 24.55% respectively while in North America, sustainability variance expounds on 51.03% and the rest variances account for GDP 24.68% and population 2.56%.Table 13 denotes these results.Depending on that the quarters, we know how the values of indicators like sustainability and GDP can be predicted.The findings for hypothesis 2 -2, then provide, not vague explanations, support for an idea that why the sustainability in Asia Pacific area has the importance for future because it would be the overarching factor for near future.In summary, the results are consistent with the hypotheses developed above.We know the ramification that how the impact of the sustainability to financial returns and economic development influence s on several industries.

Contributions
As discussed in the previous section, the literature has argued that the sustainability benefit is relevant to financial returns and economic values of firms, depending on time such as short and long run, against the opponents who think that it has no guarantee for now and future.While there are many conceptual and theoretical papers in this field, the fact is that there are not many empirical studies.Moreover, as seen in BCG report [10], the recognitions for why sustainability is being crucial have not been changed by thinking of that it is not only an environmental strategy but also future plan.Sustainability conforms to the cardinal natures in which environment, society, and governance interact with each different speed.Besides, its quantification model takes many times and variables.Doing sustainable management helps firms or institutions to get innovative processes, to reduce waste, and to gain insight into possible growth areas as evidence by [33].Therefore, the sustainability is not an environmentally oriented strategy, but the multifaceted solutions that subsume environment, society, and governance in public and private sectors.
Showing the relationship between financial performance and economic development regarding the sustainability of Asia Pacific and North America is meaningful.We have two contributions in micro perspective and macro perspective respectively through this study.Firstly, in micro view, using the real and authentic data, we found a strong relationship between financial returns and sustainability, analyzing capital flows in stock markets and firm's share prices and financial statement.If many companies recognize this implication, they will invest actively in the assets such as making amenities and facilities, adopting new technologies including upright entrepreneurship.In general, this is because they want to get many investments from institutional investors.Through the results of hypothesis 1, their relation was significant for now and future, not talking about a tedious stor y that investments are highly pertinent to financial returns.
Secondly, macro perspective gives us the significance that sustainability is positively germane to not only to financial performance but also to economic growth by classifying two regions like A sia Pacific and North America.Among macro-economy variables, especially concerning economic growth, the most commonly used variables are GDP and GNI, adding their per capita individually.This implication is imprinted on policymakers because a cardinal pr inciple of sustainability, like ESG, can apply for all countries, even though each nation depends on different history, economy, society, and political circumstances.Following that economic growth has importance for the overall quality of life and education level, this paper demonstrated clearly that two regions, Asia Pacific and North America have a different sustainability and GDP values in forecast error variance decomposition.There is one more contribution that the firms in this paper were considered by several industries such as beverage, oil, telecommunications, electronics, automotive, pharmaceutical, and banking industries, although each company does not mean an industry representative.

Limitations and Future research
VAR model has a bit of limitation; having less preliminary information like being atheoretical; using nonstationary variables [15]; showing different values in time length, which means critical values can be changed.Despite these drawbacks, what we did ameliorate was to run ADF test to get stationary variables individually and to determine the reasonable time length, which was operated by the test of lag selection.Depending on each variable's stationarity, we have run different sort of time series analysis such as VECM, and ARIMA.Even though VAR model is a-theoretical, this study made rational equations of sustainability to supplement defect, which has less prior information.We, however, have still a limit due to lack of one data, Asia Pacific GNI per capita.This point is what we have to make up for future research.Plus, to prove the economic development, it has to do add up with many macro-economy variables such as private and public consumption, price level, money supply, and un/employment rate, even though both GNI and GDP are the important factors as an evaluating economic index.

Table 2 .
How to operate time series model

Table 4 .
Values of ADF and KPSS Test

Table 5 .
Results of Hypothesis 1-1 in Asia Pacific

Table 7 .
Results of Hypothesis 1-2 in Asia Pacific

Table 8 .
VECM Results of Hypothesis 1-2 in North America

Table 9 .
Results of Hypothesis 1-2 in Asia Pacific

Table 13 .
Results of Forecast Error Variance Decomposition for Hypothesis 2-2