Sensitive industries produce better ESG performance: Evidence from emerging markets

Abstract

Given the rising interest in corporate social responsibility (CSR) globally, this paper investigates whether the financial profile of a firm is associated with superior environmental, social and governance (ESG) performance, considering firms from Brazil, Russia, India, China and South Africa (the so-called BRICS countries) with the aim of addressing a gap in relevant research. The study entails an analysis of ESG performance in sensitive industries (i.e., those subject to systematic social taboos, moral debates, and political pressures and those that are more likely to cause social and environmental damage). To test our hypotheses, we applied linear regressions with a data panel using the Thomson Reuters Eikon(TM) database to analyze data from 365 listed companies selected from BRICS between 2010 and 2012. The results suggest that companies in sensitive industries present superior environmental performance, even when controlling for the firm's size and country. Our study contributes to research on both the impact of ESG disclosure and the relationship between financial and ESG performance, as well to the practice of sus-tainability management in firms in developing countries. (c) 2017 Elsevier Ltd. All rights reserved.