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ESG Indicators as Organizational Performance Goals: Do Rating Agencies Encourage a Holistic Approach?

Department of Social, Health and Organizational Psychology, Utrecht University, P.O. Box 80140, 3508 TC Utrecht, The Netherlands
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Sustainability 2020, 12(24), 10228; https://doi.org/10.3390/su122410228
Received: 15 October 2020 / Revised: 30 November 2020 / Accepted: 3 December 2020 / Published: 8 December 2020
Offering environmental, social, and governance (ESG) assessment and certification can invite organizations to adapt their activities to accommodate environmental, social, and governance concerns. Prior research points to shortcomings in accurately monitoring and assessing organizational sustainability performance. This contribution aims to highlight the role of ESG indicators as motivating organizations to prioritize sustainability goals. Theory and research elucidate that the definition of specific goals guides the degree of effort organizations invest, the priorities they set, and the persistence they display in pursuing targeted outcomes. The extent to which performance assessments of rating agencies specify and integrate ESG concerns thus impacts the likelihood that organizations will address each of these sustainability targets. The likely impact of ESG indicators was examined by consulting ratings, rankings, and indexes from 130 rating agencies included in the Reporting Exchange Platform. We identified and categorized 237 unique indicators in over 600 corporate ESG indicators. Results reveal that themes covered are less well specified in the governance domain than in the environmental and social domain. Further, different dimensions are emphasized depending on which stakeholder is addressed (investors, consumers, companies). Taken together, we conclude that this makes it more difficult for organizations to adopt a holistic approach to the achievement of sustainability goals. View Full-Text
Keywords: environmental, social, and governance (ESG) indicators; ESG rating agencies; goal setting; organizational performance; sustainable development environmental, social, and governance (ESG) indicators; ESG rating agencies; goal setting; organizational performance; sustainable development
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MDPI and ACS Style

Veenstra, E.M.; Ellemers, N. ESG Indicators as Organizational Performance Goals: Do Rating Agencies Encourage a Holistic Approach? Sustainability 2020, 12, 10228. https://doi.org/10.3390/su122410228

AMA Style

Veenstra EM, Ellemers N. ESG Indicators as Organizational Performance Goals: Do Rating Agencies Encourage a Holistic Approach? Sustainability. 2020; 12(24):10228. https://doi.org/10.3390/su122410228

Chicago/Turabian Style

Veenstra, Esmee M., and Naomi Ellemers. 2020. "ESG Indicators as Organizational Performance Goals: Do Rating Agencies Encourage a Holistic Approach?" Sustainability 12, no. 24: 10228. https://doi.org/10.3390/su122410228

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