Saturday, 22 October 2011: 4:35 PM
Using newly available data from Bloomberg, on Environmental, Social and Governance (ESG) factors, the paper is aimed at investigating the impact of sustainability attitudes on financial performance for a large sample of US and European firms during 2007-10. As the financial turmoil of 2008 and recent environmental challenges caused by pollution have illustrated, management attention to corporate social responsibility (CSR) elements can have a substantial influence on survival and growth of commercial enterprises. An interesting issue in the ongoing debate is whether social responsibility is a superior corporate behaviour in terms of the financial consequences of adopted CSR attitudes. Our panel analysis assesses the value of sustainability strategies by using a set of standard, externally fixed, criteria for ESG behaviour of firms, and both accounting-based and market-based measures of financial performance. Our results suggest that financial performance can be an increasing function of improved ESG quality.