Macro Uncertainty Impacts on ESG Performance and Carbon Emission Reduction Targets

Round 1

Reviewer 1 Report

Thanks for your manuscript. It was very interesting and relevant to my interests. Consider the outcome "major revisions" solely as the opportunity to clarify some sentences and add some potentially useful insights in the conclusions.

The article is well-written, concise and goes directly to the point. It was very easy to understand and review.

I have only a few comments that are stated here below:

I would reframe the following sentence:

“Unlike prior research which is focused on the impact national culture and other country-level factors on firm-level corporate social responsibility (CSR) disclosure.”

it is disconnected from the previous sentence and not easy to understand the relationship between these factors and disclosure

Line 85: there is a typo. Second instead of Section

LINE 298 to 301: "GDP has a negative association with ESG at 1% significance level, implying that countries with larger economies (as indicated by their GDP) are more likely to focus on investing on environmental and social practices (for example, health issues or managing carbon emission levels), and prioritize these issues over economic growth [39]."

Above you identify a negative association between ESG and PS, saying that lower PS results in higher ESG Performance. Why here, despite a negative association, you state that a higher GDP results in higher ESG? Maybe you can describe it better?

Conclusion

Also, I would add the possibility to apply these findings or similar studies to the materiality assessment studies executed by companies, since they will be required to perform more objective studies in the near future.

Author Response

Please see the attachment. 

Author Response File: Author Response.pdf

Reviewer 2 Report

Dear authors,

The paper deals with an exciting and innovative perspective, trying to describe how companies’ contexts affect their behaviour regarding ESG and carbon emissions.

Congratulations to the author for addressing the theme. The article is well written, with a good review of the literature and sound statistical work.

We have some considerations to enhance the quality of the paper, as follows.

First, regarding the purpose, “to understand whether corporate ESG performance and carbon emission reduction targets (CERTs) are influenced by the unexplored macro uncertainty factors (MUFs) associated with economic and political uncertainties, and prevailing national cultural features, i.e., economic policy uncertainty (EPU), political instability (PIS), and cultural uncertainty avoidance (UA).” I think it is too long. It is almost a description, rather than an objective.

Second, I didn´t understand the statement, “Unlike prior research which is focused on the impact national culture and other country-level factors on firm-level corporate social responsibility (CSR) disclosure. (pg. 2)

Third, why the dependent variables are ESG Performance AND Carbon Emission Reduction Targets? Why these two? Moreover, isn´t CERT a part of the E in ESG? In other words, isn´t it redundant?

Fourth, why these three countries USA, China and the UK? They are relevant, of course, but what about the others? The choice of these countries studied could be better based. The question of the importance of the 3 for the global economy is not enough since we could also classify other countries in this aspect.

Fifth, still regarding the method, there is no explanation about the choice of the 11 sectors studied.

Sixth, what about multinational companies from these countries in these countries? Doesn´t it deserve some comments?

Seventh, regarding results. There is a good comparison between the average values found in the surveys and other studies involving other countries. However, the authors could make an analysis themselves in relation to what these values mean or can mean. It would be important to know the values found for the variables over the period studied for the three countries. The authors should analyze political and economic instability, relating the values found to historical events, to give more reliability to the values used. Separating ESG into scores for environmental, social, and governance performance would be important. The three ESG dimensions are very different, which can cause confusion in the said assertions. For example, the increase in actions to improve internal governance in scenarios of political and economic uncertainty is understandable, but the same for actions aimed at the social dimension goes against common logic. I am not saying that it cannot be true but separating it into three different variables would be better to confirm this and avoid interpretation confusion. Finally, the assertion “Moreover, ESG performance is higher in more profitable companies operating in countries with a low level of PS and UA.” which is in lines 343 and 344 could be better explained, detailing its analysis, considering its importance for the results.

In short, the results as a whole could be further analyzed. The descriptive part of the findings is clear, but the comparison with the literature and the authors’ own analysis leaves something to be desired.

Eighth, in the Final Considerations, the contributions of the study were focused on the government. The authors can deepen what the managerial and theoretical contributions are.

Ninth, in suggestions for future research, the authors could address relationships between variables and not just changes in the sample.

Finally, there is a possible writing error on line 85.

Good luck to the authors.

Author Response

Please see the attachment.

Author Response File: Author Response.pdf