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Saving planet earth or maximizing financial gains: A global analysis of environmental performance positioning as an ESG strategy

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  • Cheng, Louis T.W.
  • Fan, Kwok Yuen
  • Shen, Jianfu
  • Yu, Qing

Abstract

This study examines the association between ESG strategic positioning, a rating-optimizing strategy in which firms exhibit stronger social and governance performance relative to environmental performance, and firm environmental and financial outcomes using global listed-firm data from 2010 to 2021. A one-standard-deviation increase in ESG strategic positioning is associated with 8.4%, 3.1%, and 6.1% higher direct, indirect, and total GHG emission intensity, respectively, relative to their sample means. The same increase is also associated with 24.0%, 8.3%, and 7.0% higher net profit margin, return on assets, and return on equity, respectively. Further analysis indicates that the positive association between ESG strategic positioning and emissions is more pronounced among firms with higher overall ESG ratings. Although the average level of ESG strategic positioning is higher in developed markets, its association with emissions is stronger in emerging markets. This association is also more pronounced in downstream customer-oriented industries. Overall, the evidence is consistent with the view that pillar-based ESG rating methodologies are associated with strategic behavior and a weaker sustainability signal in aggregate ESG ratings.

Suggested Citation

  • Cheng, Louis T.W. & Fan, Kwok Yuen & Shen, Jianfu & Yu, Qing, 2026. "Saving planet earth or maximizing financial gains: A global analysis of environmental performance positioning as an ESG strategy," Research in International Business and Finance, Elsevier, vol. 89(C).
    • Handle: RePEc:eee:riibaf:v:89:y:2026:i:c:s0275531926001893
    DOI: 10.1016/j.ribaf.2026.103462
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