Environmental, social and governance (ESG) performance of firms in the era of geopolitical conflicts


Do geopolitical conflicts matter for the environmental, social, governance (ESG) and overall ESG performance of firms? We answer this question by studying the impact of geopolitical conflict of a country on the ESG performance, separately and collectively, of firms of that country. We use data from Refinitiv and UCDP/PRIO (Uppsala Conflict Data Program/International Peace Research Institute, Oslo) databases for the period from 2002 to 2021 for 79 countries and we use fixed effects regression as our main methodology. We find that if a country is in a geopolitical conflict, their firms are impacted in the form of lower E, S and G performance and overall ESG performance, with stronger effects for developed countries. This comes on top of the direct costs of geopolitical conflicts. Our results are robust to country, year and firm fixed effects as well as robust to endogeneity as we use Lewbel (2012) estimator to eliminate any chances of endogeneity. We provide first evidence on this topic and it has geopolitical and socioeconomical implications.

Publication DOI: https://doi.org/10.1016/j.jenvman.2023.119744
Divisions: College of Business and Social Sciences > Aston Business School
College of Business and Social Sciences > Aston Business School > Centre for Personal Financial Wellbeing
College of Business and Social Sciences > Aston Business School > Economics, Finance & Entrepreneurship
College of Business and Social Sciences > Aston Business School > Operations & Information Management
Aston University (General)
Additional Information: Copyright © 2023, Elsevier. This accepted manuscript version is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International https://creativecommons.org/licenses/by-nc-nd/4.0/
Publication ISSN: 1095-8630
Last Modified: 19 Jun 2024 17:48
Date Deposited: 11 Dec 2023 09:47
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Related URLs: https://www.sci ... 532X?via%3Dihub (Publisher URL)
PURE Output Type: Article
Published Date: 2024-02
Published Online Date: 2023-12-07
Accepted Date: 2023-11-29
Authors: Saharti, Mohammed
Chaudhry, Sajid M. (ORCID Profile 0000-0001-8769-8920)
Pekar, Viktor (ORCID Profile 0000-0002-9664-1675)
Bajoori, Elnaz



Version: Accepted Version

Access Restriction: Restricted to Repository staff only until 7 December 2024.

License: Creative Commons Attribution Non-commercial No Derivatives

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