ESG scores during the pandemic

Abstract

In recent years, firms have increased their investments in environmental, social, and governance activities. Using a large sample of large US firms, this paper investigates the effect of the COVID-19 pandemic on firms' SG activities. First, we investigate whether the pandemic induced firms to increase their environmental, social, and governmental investment. Our initial results reveal that firms increase their environmental, social, and governance activities despite the financial challenges during the pandemic. However, further investigation demonstrates that a general increase in social investments drives our initial results. Also, our findings indicate that, with respect to environmental, social, and governance activities, the pandemic affected industries in different ways. Limitations and directions for future studies are also provided.