IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v15y2023i3p1796-d1038953.html
   My bibliography  Save this article

Stopping or Continuing to Follow Best Practices in Terms of ESG during the COVID-19 Pandemic? An Exploratory Study of European Listed Companies

Author

Listed:
  • Giuseppe Maria Bifulco

    (Department of Economics, Management, Institutions, Università degli Studi di Napoli “Federico II”, 80126 Napoli, Italy)

  • Riccardo Savio

    (Department of Law and Economics of Productive Activities, Sapienza Università di Roma, 00161 Rome, Italy)

  • Maria Federica Izzo

    (Department of Business and Management, Università Telematica San Raffaele, 00166 Rome, Italy)

  • Riccardo Tiscini

    (Department of Economics, Universitas Mercatorum, 00186 Rome, Italy)

Abstract

This study aims to examine the effect of the COVID-19 pandemic on environmental, social, and governance (ESG) performance for European listed companies. The purpose of this study is to understand if and how the COVID-19 pandemic outbreak influenced the behavior of European companies in terms of best practices in ESG. In this paper, we consider the ESG score as a proxy of management practices. The ESG score was collected for all companies included in the STOXX 600 index (from the Refinitiv Eikon database) and analyzed using fixed and random effects. The sample is composed of 600 European listed companies and covers the period from 2018 to 2021. The results show that even in a health crisis with economic repercussions for the whole world, companies have continued to increase their commitment to ESG targets. The results are robust, also considering the different components of the ESG score (environment, social, governance) individually. This paper validates the significance for companies to improve their ESG performance even during unstable times. Our analysis has implications from several perspectives, adding supplementary information and considerations to the uncompleted debate examining the effects of external shocks on ESG performance.

Suggested Citation

  • Giuseppe Maria Bifulco & Riccardo Savio & Maria Federica Izzo & Riccardo Tiscini, 2023. "Stopping or Continuing to Follow Best Practices in Terms of ESG during the COVID-19 Pandemic? An Exploratory Study of European Listed Companies," Sustainability, MDPI, vol. 15(3), pages 1-16, January.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:3:p:1796-:d:1038953
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/15/3/1796/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/15/3/1796/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Helen Chiappini & Gianfranco A. Vento, 2018. "Socially Responsible Investments and their Anticyclical Attitude during Financial Turmoil Evidence from the Brexit shock," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 8(1), pages 1-4.
    2. Ľuboš Pástor & M Blair Vorsatz & Jeffrey Pontiff, 0. "Mutual Fund Performance and Flows during the COVID-19 Crisis," The Review of Asset Pricing Studies, Society for Financial Studies, vol. 10(4), pages 791-833.
    3. Geoffrey Heal, 2005. "Corporate Social Responsibility: An Economic and Financial Framework," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 30(3), pages 387-409, July.
    4. Thiemo Fetzer & Lukas Hensel & Johannes Hermle & Christopher Roth, 2021. "Coronavirus Perceptions and Economic Anxiety," The Review of Economics and Statistics, MIT Press, vol. 103(5), pages 968–978-9, December.
    5. Leonardo Becchetti & Rocco Ciciretti & Ambrogio Dalò & Stefano Herzel, 2015. "Socially responsible and conventional investment funds: performance comparison and the global financial crisis," Applied Economics, Taylor & Francis Journals, vol. 47(25), pages 2541-2562, May.
    6. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 38(2), pages 112-134.
    7. Nakai, Miwa & Yamaguchi, Keiko & Takeuchi, Kenji, 2016. "Can SRI funds better resist global financial crisis? Evidence from Japan," International Review of Financial Analysis, Elsevier, vol. 48(C), pages 12-20.
    8. Samuel Drempetic & Christian Klein & Bernhard Zwergel, 2020. "The Influence of Firm Size on the ESG Score: Corporate Sustainability Ratings Under Review," Journal of Business Ethics, Springer, vol. 167(2), pages 333-360, November.
    9. Ahmad Al-Fadly, 2020. "Impact of COVID-19 on SMEs and employment," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 8(2), pages 629-648, December.
    10. de Jong, Abe & Kabir, Rezaul & Nguyen, Thuy Thu, 2008. "Capital structure around the world: The roles of firm- and country-specific determinants," Journal of Banking & Finance, Elsevier, vol. 32(9), pages 1954-1969, September.
    11. Min Liu & Wei-Chong Choo & Chien-Chiang Lee, 2020. "The Response of the Stock Market to the Announcement of Global Pandemic," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 56(15), pages 3562-3577, December.
    12. Murphy, Gregory B. & Trailer, Jeff W. & Hill, Robert C., 1996. "Measuring performance in entrepreneurship research," Journal of Business Research, Elsevier, vol. 36(1), pages 15-23, May.
    13. Rui Albuquerque & Yrjo Koskinen & Shuai Yang & Chendi Zhang, 2020. "Resiliency of Environmental and Social Stocks: An Analysis of the Exogenous COVID-19 Market Crash," The Review of Corporate Finance Studies, Society for Financial Studies, vol. 9(3), pages 593-621.
    14. Bollen, Nicolas P. B., 2007. "Mutual Fund Attributes and Investor Behavior," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 42(3), pages 683-708, September.
    15. Singh, Amanjot, 2020. "COVID-19 and safer investment bets," Finance Research Letters, Elsevier, vol. 36(C).
    16. Kinateder, Harald & Campbell, Ross & Choudhury, Tonmoy, 2021. "Safe haven in GFC versus COVID-19: 100 turbulent days in the financial markets," Finance Research Letters, Elsevier, vol. 43(C).
    17. Karl V. Lins & Henri Servaes & Ane Tamayo, 2017. "Social Capital, Trust, and Firm Performance: The Value of Corporate Social Responsibility during the Financial Crisis," Journal of Finance, American Finance Association, vol. 72(4), pages 1785-1824, August.
    18. Dima Jamali & Ramez Mirshak, 2007. "Corporate Social Responsibility (CSR): Theory and Practice in a Developing Country Context," Journal of Business Ethics, Springer, vol. 72(3), pages 243-262, May.
    19. Ghanbarpour, Tohid & Gustafsson, Anders, 2022. "How do corporate social responsibility (CSR) and innovativeness increase financial gains? A customer perspective analysis," Journal of Business Research, Elsevier, vol. 140(C), pages 471-481.
    20. Elizabeth Demers & Jurian Hendrikse & Philip Joos & Baruch Lev, 2021. "ESG did not immunize stocks during the COVID‐19 crisis, but investments in intangible assets did," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 48(3-4), pages 433-462, March.
    21. Erhemjamts, Otgontsetseg & Huang, Kershen, 2019. "Institutional ownership horizon, corporate social responsibility and shareholder value," Journal of Business Research, Elsevier, vol. 105(C), pages 61-79.
    22. Adams, Carol A. & Abhayawansa, Subhash, 2022. "Connecting the COVID-19 pandemic, environmental, social and governance (ESG) investing and calls for ‘harmonisation’ of sustainability reporting," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 82(C).
    23. Lukas Buchheim & Jonas Dovern & Carla Krolage & Sebastian Link, 2020. "Firm-Level Expectations and Behavior in Response to the Covid-19 Crisis," CESifo Working Paper Series 8304, CESifo.
    24. Cooper, Arnold C. & Woo, Carolyn Y. & Dunkelberg, William C., 1989. "Entrepreneurship and the initial size of firms," Journal of Business Venturing, Elsevier, vol. 4(5), pages 317-332, September.
    25. Stefan Schaltegger & Jacob Hörisch, 2017. "In Search of the Dominant Rationale in Sustainability Management: Legitimacy- or Profit-Seeking?," Journal of Business Ethics, Springer, vol. 145(2), pages 259-276, October.
    26. Gregor Dorfleitner & Christian Kreuzer & Christian Sparrer, 2020. "ESG controversies and controversial ESG: about silent saints and small sinners," Journal of Asset Management, Palgrave Macmillan, vol. 21(5), pages 393-412, September.
    27. Steven Scalet & Thomas Kelly, 2010. "CSR Rating Agencies: What is Their Global Impact?," Journal of Business Ethics, Springer, vol. 94(1), pages 69-88, June.
    28. Syed Kumail Abbas Rizvi & Nawazish Mirza & Bushra Naqvi & Birjees Rahat, 2020. "Covid-19 and asset management in EU: a preliminary assessment of performance and investment styles," Journal of Asset Management, Palgrave Macmillan, vol. 21(4), pages 281-291, July.
    29. Maria Baldini & Lorenzo Dal Maso & Giovanni Liberatore & Francesco Mazzi & Simone Terzani, 2018. "Role of Country- and Firm-Level Determinants in Environmental, Social, and Governance Disclosure," Journal of Business Ethics, Springer, vol. 150(1), pages 79-98, June.
    30. Benson, Karen L. & Humphrey, Jacquelyn E., 2008. "Socially responsible investment funds: Investor reaction to current and past returns," Journal of Banking & Finance, Elsevier, vol. 32(9), pages 1850-1859, September.
    31. Nofsinger, John & Varma, Abhishek, 2014. "Socially responsible funds and market crises," Journal of Banking & Finance, Elsevier, vol. 48(C), pages 180-193.
    32. Yoo, Sunbin & Keeley, Alexander Ryota & Managi, Shunsuke, 2021. "Does sustainability activities performance matter during financial crises? Investigating the case of COVID-19," Energy Policy, Elsevier, vol. 155(C).
    33. HaiYue Liu & Yile Wang & Dongmei He & Cangyu Wang, 2020. "Short term response of Chinese stock markets to the outbreak of COVID-19," Applied Economics, Taylor & Francis Journals, vol. 52(53), pages 5859-5872, November.
    34. Manuel Branco & Lúcia Rodrigues, 2008. "Factors Influencing Social Responsibility Disclosure by Portuguese Companies," Journal of Business Ethics, Springer, vol. 83(4), pages 685-701, December.
    35. Dinh Hoang Bach Phan & Paresh Kumar Narayan, 2020. "Country Responses and the Reaction of the Stock Market to COVID-19—a Preliminary Exposition," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 56(10), pages 2138-2150, August.
    36. Pavlova, Ivelina & de Boyrie, Maria E., 2022. "ESG ETFs and the COVID-19 stock market crash of 2020: Did clean funds fare better?," Finance Research Letters, Elsevier, vol. 44(C).
    37. Jill Juergensen & José Guimón & Rajneesh Narula, 2020. "European SMEs amidst the COVID-19 crisis: assessing impact and policy responses," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 47(3), pages 499-510, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Salvatore Ferri & Alberto Tron & Federico Colantoni & Riccardo Savio, 2023. "Sustainability Disclosure and IPO Performance: Exploring the Impact of ESG Reporting," Sustainability, MDPI, vol. 15(6), pages 1-15, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Omura, Akihiro & Roca, Eduardo & Nakai, Miwa, 2021. "Does responsible investing pay during economic downturns: Evidence from the COVID-19 pandemic," Finance Research Letters, Elsevier, vol. 42(C).
    2. Hooi Hooi Lean & Fabio Pizzutilo & Kimberly Gleason, 2023. "Portfolio performance implications of investment in renewable energy equities: Green versus gray," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(6), pages 2990-3005, November.
    3. Fabio Pisani & Giorgia Russo, 2021. "Sustainable Finance and COVID-19: The Reaction of ESG Funds to the 2020 Crisis," Sustainability, MDPI, vol. 13(23), pages 1-18, November.
    4. Cerqueti, Roy & Ciciretti, Rocco & Dalò, Ambrogio & Nicolosi, Marco, 2021. "ESG investing: A chance to reduce systemic risk," Journal of Financial Stability, Elsevier, vol. 54(C).
    5. Nakai, Miwa & Yamaguchi, Keiko & Takeuchi, Kenji, 2016. "Can SRI funds better resist global financial crisis? Evidence from Japan," International Review of Financial Analysis, Elsevier, vol. 48(C), pages 12-20.
    6. Singh, Amanjot & Patel, Ritesh & Singh, Harminder, 2022. "Recalibration of priorities: Investor preference and Russia-Ukraine conflict," Finance Research Letters, Elsevier, vol. 50(C).
    7. Lei, Heng & Xue, Minggao & Liu, Huiling & Ye, Jing, 2023. "Precious metal as a safe haven for global ESG stocks: Portfolio implications for socially responsible investing," Resources Policy, Elsevier, vol. 80(C).
    8. Riccardo Savio & Edoardo D’Andrassi & Francesca Ventimiglia, 2023. "A Systematic Literature Review on ESG during the COVID-19 Pandemic," Sustainability, MDPI, vol. 15(3), pages 1-17, January.
    9. Huang, Shoujun & Liu, Hezhe, 2021. "Impact of COVID-19 on stock price crash risk: Evidence from Chinese energy firms," Energy Economics, Elsevier, vol. 101(C).
    10. Liu, Lian & Nemoto, Naoko & Lu, Changrong, 2023. "The Effect of ESG performance on the stock market during the COVID-19 Pandemic — Evidence from Japan," Economic Analysis and Policy, Elsevier, vol. 79(C), pages 702-712.
    11. Zhang, Ning & Zhang, Yue & Zong, Zhe, 2023. "Fund ESG performance and downside risk: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 86(C).
    12. Fang, Fei & Parida, Sitikantha, 2022. "Sustainable mutual fund performance and flow in the recent years through the COVID-19 pandemic," International Review of Financial Analysis, Elsevier, vol. 84(C).
    13. Ferriani, Fabrizio, 2023. "Issuing bonds during the Covid-19 pandemic: Was there an ESG premium?," International Review of Financial Analysis, Elsevier, vol. 88(C).
    14. Fariha Jahan & Jungmu Kim, 2023. "Does the Shield Effect of CSR Work in Crises? Evidence in Korea," Sustainability, MDPI, vol. 15(11), pages 1-18, June.
    15. Paolo Capelli & Federica Ielasi & Angeloantonio Russo, 2021. "Forecasting volatility by integrating financial risk with environmental, social, and governance risk," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 28(5), pages 1483-1495, September.
    16. Agliardi, Elettra & Alexopoulos, Thomas & Karvelas, Kleanthis, 2023. "The environmental pillar of ESG and financial performance: A portfolio analysis," Energy Economics, Elsevier, vol. 120(C).
    17. Pablo Durán-Santomil & Luis Otero-González & Renato Heitor Correia-Domingues & Juan Carlos Reboredo, 2019. "Does Sustainability Score Impact Mutual Fund Performance?," Sustainability, MDPI, vol. 11(10), pages 1-17, May.
    18. Lee, Michael T. & Raschke, Robyn L., 2023. "Stakeholder legitimacy in firm greening and financial performance: What about greenwashing temptations?☆," Journal of Business Research, Elsevier, vol. 155(PB).
    19. Tobias Bauckloh & Stefan Schaltegger & Sebastian Utz & Sebastian Zeile & Bernhard Zwergel, 2023. "Active First Movers vs. Late Free-Riders? An Empirical Analysis of UN PRI Signatories’ Commitment," Journal of Business Ethics, Springer, vol. 182(3), pages 747-781, January.
    20. Jun Duanmu & Qiping Huang & Yongjia Li & Garrett A. McBrayer, 2021. "Can hedge funds benefit from corporate social responsibility investment?," The Financial Review, Eastern Finance Association, vol. 56(2), pages 251-278, May.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:15:y:2023:i:3:p:1796-:d:1038953. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.