Corporate and regional ESG ratings: Is there a connection?
DOI:
https://doi.org/10.21638/spbu05.2024.407Abstract
The trend of creating ratings of the regions and companies based on the environmental, social and governance factors is on the current agenda. It is proven in practice and in numerous studies that there is a positive impact of ESG rating positions on the economic efficiency of companies: on the value of the company due to improving reputation and increasing labor productivity, on corporate profitability, credit ratings, rise in share prices, reducing the volatility of stock returns. As a result, there is a growing number of corporations interested in improving their assessment in a number of national and international ratings (this research
studies ESG Book, Morningstar Sustainalytics). At the same time, the consulting and rating agencies create ESG ratings of regions (World Economics Journal, Global Sustainable Competitiveness Index, Heritage Foundation), assessing countries according to the parameters of the sustainable development. The question is whether there is a mutual influence of the corporate and the regional ESG ratings. The purpose of this article is to identify whether there is a relationship between the factors of corporate ESG ratings and the ESG indicators of countries where these corporations are registered. The subjects of this study are corporate and regional ESG ratings. The methodological basis of this work is a regression analysis. The results showed a statistically significant relationship between the corporate ESG ratings and the regional indicators of sustainable development: both for individual ESG parameters and in a form of an integral assessment (ESG). Nevertheless, the regional ESG ratings have a limited impact on the number of corporate assessments of sustainable development, and this relationship is not as strong as the first one. It is possible that this relationship will become stronger over time, that can be a subject of further research. Countries all over the world are able to provide new tools in public policy to support companies in achieving goals of the ESG strategies, and, consequently, to improve their own regional indicators in a number of ratings, that can attract additional investments to the region and improve the quality of life of the society in the context of the ESG parameters.
Keywords:
environmental, social, governance factors, sustainable development, regression analysis, regional ratings, corporate ratings, rating agencies
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