Economic Sustainability, Innovation, and the ESG Factors: An Empirical Investigation
Abstract
:1. Introduction
2. Literature and Hypothesis Development
3. Data and Methodology
4. Empirical Results
5. Conclusions
Author Contributions
Funding
Institutional Review Board Statement
Informed Consent Statement
Data Availability Statement
Acknowledgments
Conflicts of Interest
References
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Variables | Definitions | Data Source |
---|---|---|
Dependent variable | ||
Ecnscore | The economic pillar measures a company’s capacity to generate sustainable growth and a high return on investment through the efficient use of all its resources. It reflects a company’s overall financial health and its ability to generate long-term shareholder value through its use of best management practices. | Refinitiv |
Independent variable | ||
MPI | The product of annual R&D intensity defined as the ratio of R&D expenses to total assets multiplied by the market-to-book ratio. | EC JRC (1° Factor); Refinitiv (2° Factor) |
Esgscore | The simple average of Envscore, Socscore, and Cgvscore. | Author’s calculation |
Envscore | The environmental pillar measures a company’s impact on living and non-living natural systems, including the air, land, and water, as well as complete ecosystems. It reflects how well a company uses best management practices to avoid environmental risks and capitalize on environmental opportunities to generate long-term shareholder value. | Refinitiv |
Socscore | The social pillar measures a company’s capacity to generate trust and loyalty with its workforce, customers, and society through its use of best management practices. It is a reflection of the company’s reputation and the health of its license to operate, which are key factors in determining its ability to generate long-term shareholder value. | Refinitiv |
Cgvscore | The corporate governance pillar measures a company’s systems and processes, which ensures that its board members and executives act in the best interests of its long-term shareholders. It reflects a company’s capacity through its use of best management practices to direct and control its rights and responsibilities through the creation of incentives as well as checks and balances to generate long-term shareholder value. | Refinitiv |
China | Dummy variable equals to 1 if the firm country is China, 0 otherwise. | Refinitiv |
EU | Dummy variable equals to 1 if the firm country belongs to European Union, 0 otherwise. | Refinitiv |
Japan | Dummy variable equals to 1 if the firm country is Japan, 0 otherwise. | Refinitiv |
Northamerica | Dummy variable equals to 1 if the firm country is the US or Canada, 0 otherwise. | Refinitiv |
Tech | Dummy variable equals 1 if the firm industry is the technological, 0 otherwise. | Orbis (Bureau van Dijk) |
Control variable | ||
Size | Natural logarithm of the total sales. | Refinitiv |
Profitability | Ratio of EBIT to total assets. | Refinitiv |
Leverage | Ratio of long-term debt to total assets. | Refinitiv |
n. obs | Firms | Mean | st. dev. | min | MAX | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | |
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Ecnscore | 4246 | 909 | 68.66 | 24.77 | 2.54 | 98.29 | 1 | ||||||||
MPI | 4246 | 909 | 13.38 | 21.25 | 0.11 | 121.83 | −0.0391 | 1 | |||||||
Esgscore | 4246 | 909 | 65.79 | 21.56 | 5.27 | 96.68 | 0.6308 * | 0.0166 | 1 | ||||||
Envscore | 4246 | 909 | 74.74 | 26.87 | 8.63 | 95.59 | 0.5381 * | −0.191 * | 0.7659 * | 1 | |||||
Socscore | 4246 | 909 | 71.14 | 26.00 | 4.38 | 97.55 | 0.6698 * | −0.0884 * | 0.8594 * | 0.7866 * | 1 | ||||
Cgvscore | 4246 | 909 | 51.50 | 33.58 | 1.11 | 97.82 | 0.2657 * | 0.2533 * | 0.6479 * | 0.0662 * | 0.2517 * | 1 | |||
Size | 4246 | 909 | 15.54 | 1.20 | 13.5 | 17.88 | 0.3541 * | −0.2301 * | 0.3954 * | 0.4371 * | 0.4231 * | 0.0843 * | 1 | ||
Profitability | 4246 | 909 | 6.019 | 4.90 | −2.77 | 16.69 | 0.1695 * | 0.2780 * | 0.1095 * | −0.0450 * | 0.0268 | 0.2262 * | −0.0954 * | 1 | |
Leverage | 4246 | 909 | 17.41 | 12.90 | 0 | 44.82 | 0.0796 * | −0.0133 | 0.2649 * | 0.0820 * | 0.1415 * | 0.3350 * | 0.1889 * | −0.1220 * | 1 |
Panel A | |||||||||||||
Year | Ecnscore | MPI | Esgscore | Envscore | Socscore | Cgvscore | |||||||
n | mean | n | Mean | n | mean | n | mean | n | mean | N | mean | ||
2013 | 879 | 58.10 | 879 | 12.87 | 879 | 60.24 | 879 | 68.39 | 879 | 62.49 | 879 | 49.85 | |
2014 | 871 | 61.62 | 871 | 13.57 | 871 | 61.71 | 871 | 70.21 | 871 | 64.85 | 871 | 50.06 | |
2015 | 848 | 69.67 | 848 | 13.19 | 848 | 66.37 | 848 | 75.31 | 848 | 72.21 | 848 | 51.59 | |
2016 | 839 | 76.35 | 839 | 13.05 | 839 | 69.58 | 839 | 79.13 | 839 | 77.16 | 839 | 52.46 | |
2017 | 809 | 78.67 | 809 | 14.29 | 809 | 71.68 | 809 | 81.34 | 809 | 79.95 | 809 | 53.73 | |
Total | 4246 | 446 | 4246 | 4246 | 4246 | 4246 | |||||||
Panel B | |||||||||||||
Industry | Ecnscore | MPI | Esgscore | Envscore | Socscore | Cgvscore | |||||||
n | mean | n | mean | n | mean | n | mean | n | mean | N | mean | ||
Automobile and Parts | 260 | 65.21 | 260 | 9.29 | 260 | 63.74 | 260 | 82.69 | 260 | 68.08 | 260 | 40.46 | |
Basic Resource | 169 | 70.80 | 169 | 1.06 | 169 | 68.89 | 169 | 85.20 | 169 | 79.07 | 169 | 42.40 | |
Chemicals | 325 | 77.78 | 325 | 6.00 | 325 | 71.36 | 325 | 87.56 | 325 | 82.86 | 325 | 43.66 | |
Constr e Mat | 138 | 75.79 | 138 | 5.87 | 138 | 67.43 | 138 | 84.61 | 138 | 76.28 | 138 | 41.41 | |
Consum Prod e Serv | 321 | 68.30 | 321 | 10.80 | 321 | 61.63 | 321 | 71.59 | 321 | 67.95 | 321 | 45.36 | |
Drug e Grocery Store | 53 | 81.96 | 53 | 11.50 | 53 | 81.17 | 53 | 88.15 | 53 | 87.94 | 53 | 67.41 | |
Energy | 152 | 76.43 | 152 | 1.78 | 152 | 75.30 | 152 | 80.58 | 152 | 79.39 | 152 | 65.93 | |
Financial service | 24 | 56.94 | 24 | 5.09 | 24 | 45.99 | 24 | 47.12 | 24 | 41.06 | 24 | 49.78 | |
Bev Food Tob | 200 | 74.09 | 200 | 4.14 | 200 | 67.80 | 200 | 74.77 | 200 | 75.61 | 200 | 53.01 | |
Healt Care | 471 | 66.90 | 471 | 29.85 | 471 | 63.22 | 471 | 61.03 | 471 | 68.23 | 471 | 60.41 | |
Ind Goods and Service | 969 | 65.79 | 969 | 9.40 | 969 | 65.44 | 969 | 75.32 | 969 | 67.86 | 969 | 53.15 | |
Media | 25 | 51.18 | 25 | 27.00 | 25 | 56.39 | 25 | 58.91 | 25 | 51.42 | 25 | 58.82 | |
Real Estate | 5 | 84.06 | 5 | 0.58 | 5 | 90.55 | 5 | 92.60 | 5 | 93.62 | 5 | 85.42 | |
Retailer | 15 | 55.41 | 15 | 41.10 | 15 | 54.95 | 15 | 53.03 | 15 | 65.58 | 15 | 46.25 | |
Technology | 835 | 66.28 | 835 | 23.00 | 835 | 64.29 | 835 | 71.65 | 835 | 69.43 | 835 | 51.79 | |
Telecomm | 150 | 71.36 | 150 | 12.55 | 150 | 71.97 | 150 | 73.95 | 150 | 75.80 | 150 | 66.16 | |
Travel & Leisure | 25 | 51.45 | 25 | 23.23 | 25 | 44.78 | 25 | 36.57 | 25 | 38.50 | 25 | 59.28 | |
Utility | 109 | 70.40 | 109 | 0.32 | 109 | 63.96 | 109 | 82.75 | 109 | 73.07 | 109 | 36.06 | |
Total | 4246 | 4246 | 4246 | 4246 | 4246 | 4246 | |||||||
Panel C | |||||||||||||
Country | Ecnscore | MPI | Esgscore | Envscore | Socscore | Cgvscore | |||||||
n | mean | n | mean | n | mean | n | mean | n | mean | N | mean | ||
Australia | 45 | 73.75 | 45 | 30.98 | 45 | 71.07 | 45 | 62.95 | 45 | 67.39 | 45 | 82.86 | |
Austria | 21 | 77.02 | 21 | 2.03 | 21 | 71.68 | 21 | 79.17 | 21 | 79.74 | 21 | 56.13 | |
Belgium | 25 | 79.68 | 25 | 13.03 | 25 | 80.84 | 25 | 86.76 | 25 | 85.84 | 25 | 69.93 | |
Bermuda | 32 | 35.57 | 32 | 5.65 | 32 | 42.25 | 32 | 40.61 | 32 | 31.34 | 32 | 54.79 | |
Brazil | 17 | 67.69 | 17 | 20.90 | 17 | 58.11 | 17 | 59.71 | 17 | 73.16 | 17 | 41.47 | |
Canada | 30 | 71.44 | 30 | 12.97 | 30 | 62.80 | 30 | 55.49 | 30 | 54.35 | 30 | 78.55 | |
Cayman Islands | 58 | 39.72 | 58 | 6.35 | 58 | 46.79 | 58 | 50.73 | 58 | 44.73 | 58 | 44.91 | |
China | 54 | 37.02 | 54 | 2.56 | 54 | 41.11 | 54 | 44.64 | 54 | 37.84 | 54 | 40.85 | |
Curaçao | 5 | 84.83 | 5 | 4.17 | 5 | 87.68 | 5 | 83.68 | 5 | 87.85 | 5 | 91.50 | |
Czech Republic | 1 | 72.85 | 1 | 0.19 | 1 | 68.85 | 1 | 89.51 | 1 | 85.67 | 1 | 31.38 | |
Denmark | 42 | 78.82 | 42 | 26.34 | 42 | 78.60 | 42 | 85.12 | 42 | 78.48 | 42 | 72.19 | |
Germany | 194 | 75.81 | 194 | 6.91 | 194 | 70.92 | 194 | 83.89 | 194 | 82.68 | 194 | 46.18 | |
Finland | 73 | 85.73 | 73 | 7.85 | 73 | 81.94 | 73 | 91.94 | 73 | 87.07 | 73 | 66.82 | |
France | 167 | 80.35 | 167 | 7.09 | 167 | 84.04 | 167 | 91.72 | 167 | 90.19 | 167 | 70.21 | |
Hong Kong | 25 | 87.18 | 25 | 4.74 | 25 | 71.27 | 25 | 63.55 | 25 | 76.25 | 25 | 74.02 | |
Hungary | 5 | 50.25 | 5 | 8.30 | 5 | 42.10 | 5 | 36.84 | 5 | 58.82 | 5 | 30.65 | |
India | 82 | 77.93 | 82 | 7.00 | 82 | 70.95 | 82 | 80.31 | 82 | 78.47 | 82 | 54.07 | |
Ireland | 26 | 78.59 | 26 | 22.71 | 26 | 84.12 | 26 | 85.83 | 26 | 79.49 | 26 | 87.04 | |
Israel | 25 | 54.73 | 25 | 9.85 | 25 | 48.52 | 25 | 50.67 | 25 | 47.61 | 25 | 47.28 | |
Italy | 23 | 90.60 | 23 | 3.01 | 23 | 89.22 | 23 | 92.22 | 23 | 91.55 | 23 | 83.89 | |
Japan | 1049 | 67.58 | 1049 | 5.87 | 1049 | 54.46 | 1049 | 82.03 | 1049 | 70.03 | 1049 | 11.33 | |
Luxembourg | 10 | 78.44 | 10 | 0.55 | 10 | 59.77 | 10 | 59.27 | 10 | 64.24 | 10 | 55.80 | |
Malaysia | 8 | 85.47 | 8 | 0.32 | 8 | 85.38 | 8 | 89.50 | 8 | 82.23 | 8 | 84.40 | |
Netherlands | 45 | 81.81 | 45 | 25.17 | 45 | 83.38 | 45 | 82.15 | 45 | 85.42 | 45 | 82.57 | |
New Zealand | 5 | 57.51 | 5 | 73.49 | 5 | 55.58 | 5 | 40.32 | 5 | 56.97 | 5 | 69.45 | |
Norway | 27 | 79.86 | 27 | 2.56 | 27 | 78.25 | 27 | 84.00 | 27 | 81.50 | 27 | 69.26 | |
Saudi Arabia | 5 | 94.54 | 5 | 0.92 | 5 | 68.67 | 5 | 93.45 | 5 | 88.67 | 5 | 23.88 | |
Singapore | 10 | 71.66 | 10 | 4.24 | 10 | 60.87 | 10 | 54.63 | 10 | 56.47 | 10 | 71.52 | |
South Africa | 5 | 80.90 | 5 | 0.82 | 5 | 93.07 | 5 | 93.55 | 5 | 95.08 | 5 | 90.58 | |
South Korea | 156 | 63.03 | 156 | 5.12 | 156 | 51.41 | 156 | 72.64 | 156 | 67.81 | 156 | 13.78 | |
Spain | 19 | 85.81 | 19 | 14.35 | 19 | 81.63 | 19 | 91.87 | 19 | 95.27 | 19 | 57.75 | |
Sweden | 56 | 76.28 | 56 | 6.99 | 56 | 77.65 | 56 | 88.56 | 56 | 86.93 | 56 | 57.45 | |
Switzerland | 156 | 72.85 | 156 | 18.66 | 156 | 69.46 | 156 | 74.60 | 156 | 74.23 | 156 | 59.54 | |
Taiwan | 264 | 54.94 | 264 | 8.73 | 264 | 53.67 | 264 | 72.36 | 264 | 65.84 | 264 | 22.81 | |
Turkey | 17 | 77.94 | 17 | 3.77 | 17 | 67.52 | 17 | 92.04 | 17 | 76.70 | 17 | 33.81 | |
United Kingdom | 213 | 72.90 | 213 | 16.12 | 213 | 76.96 | 213 | 74.75 | 213 | 74.07 | 213 | 82.06 | |
United States | 1236 | 67.62 | 1236 | 23.93 | 1236 | 71.93 | 1236 | 66.69 | 1236 | 68.23 | 1236 | 80.89 | |
Total | 4231 | 4231 | 4231 | 4231 | 4231 | 4231 |
Model 1 | Model 2 | |||||
---|---|---|---|---|---|---|
coeff. | se | Sig | coeff. | se | sig | |
constant | −32.4684 | 19.3043 | * | −24.0527 | 19.2630 | |
MPI | 0.0492 | 0.0248 | ** | 0.0478 | 0.0247 | * |
Esgscore | 0.5085 | 0.0322 | *** | |||
Envscore | 0.0569 | 0.0286 | ** | |||
Socscore | 0.3314 | 0.0266 | *** | |||
Cgvscore | 0.0752 | 0.0287 | *** | |||
Size | 3.8767 | 1.0890 | *** | 3.6379 | 1.0826 | *** |
Profitability | 0.7288 | 0.0685 | *** | 0.7337 | 0.0682 | *** |
Leverage | −0.2926 | 0.0380 | *** | −0.2924 | 0.0378 | *** |
Firm fixed effects | Yes | Yes | ||||
Year fixed effects | Yes | Yes | ||||
N | 4246 | 4246 | ||||
Adjusted R2 | 0.8124 | 0.8150 |
Model 3 | Model 4 | |||||
---|---|---|---|---|---|---|
coeff. | Se | sig | coeff. | Se | sig | |
constant | −32.7938 | 19.3096 | * | −24.3977 | 19.2666 | |
MPI | 0.0489 | 0.0249 | ** | 0.0475 | 0.0247 | * |
Esgscore | 0.5100 | 0.0323 | *** | |||
Envscore | 0.0552 | 0.0286 | *** | |||
Socscore | 0.3336 | 0.0267 | *** | |||
Cgvscore | 0.0768 | 0.0287 | *** | |||
Size | 3.8859 | 1.0894 | *** | 3.6450 | 1.0828 | *** |
Profitability | 0.7268 | 0.0685 | *** | 0.7315 | 0.0682 | *** |
Leverage | −0.2918 | 0.0380 | *** | −0.2919 | 0.0378 | *** |
China | −35.3624 | 7.2214 | *** | −36.1927 | 7.2665 | *** |
EU | 25.8427 | 7.7074 | *** | 22.3619 | 7.6989 | *** |
Japan | 15.0954 | 7.3250 | ** | 8.1750 | 7.5865 | |
Northamerica | −10.0927 | 7.0901 | −6.4053 | 7.0823 | ||
Firm fixed effects | Yes | Yes | ||||
Year fixed effects | Yes | Yes | ||||
N | 4231 | 4231 | ||||
Adjusted R2 | 0.8126 | 0.8152 |
Model 5 | Model 6 | |||||
---|---|---|---|---|---|---|
coeff. | se | sig | coeff. | Se | sig | |
constant | −32.4684 | 19.3043 | * | −24.0527 | 19.2630 | |
MPI | 0.0492 | 0.0248 | ** | 0.0478 | 0.0247 | * |
Esgscore | 0.5085 | 0.0322 | *** | |||
Envscore | 0.0569 | 0.0286 | ** | |||
Socscore | 0.3314 | 0.0266 | *** | |||
Cgvscore | 0.0752 | 0.0287 | *** | |||
Size | 3.8767 | 1.0890 | *** | 3.6379 | 1.0826 | *** |
Profitability | 0.7288 | 0.0685 | *** | 0.7337 | 0.0682 | *** |
Leverage | −0.2926 | 0.0380 | *** | −0.2924 | 0.0378 | *** |
Tech | 20.9123 | 7.5049 | *** | 14.6827 | 7.5226 | * |
Firm fixed effects | Yes | Yes | ||||
Year fixed effects | Yes | Yes | ||||
N | 4246 | 4246 | ||||
Adjusted R2 | 0.8124 | 0.8150 |
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Di Simone, L.; Petracci, B.; Piva, M. Economic Sustainability, Innovation, and the ESG Factors: An Empirical Investigation. Sustainability 2022, 14, 2270. https://doi.org/10.3390/su14042270
Di Simone L, Petracci B, Piva M. Economic Sustainability, Innovation, and the ESG Factors: An Empirical Investigation. Sustainability. 2022; 14(4):2270. https://doi.org/10.3390/su14042270
Chicago/Turabian StyleDi Simone, Luca, Barbara Petracci, and Mariacristina Piva. 2022. "Economic Sustainability, Innovation, and the ESG Factors: An Empirical Investigation" Sustainability 14, no. 4: 2270. https://doi.org/10.3390/su14042270