Avoiding Harm by Doing Good. The Substantive Role of ESG Payments for Preventing ESG Misconduct

IF 12.5 1区管理学 Q1 BUSINESS

Business Strategy and The Environment Pub Date : 2025-02-17 DOI:10.1002/bse.4207

Emma García‐Meca, Jennifer Martínez‐Ferrero, Nazim Hussain

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Abstract

This paper examines whether an ESG‐based compensation policy plays a substantive or symbolic role in the prevention of firm ESG‐related misconduct. We anticipate that companies linking ESG to board compensation will experience fewer ESG‐related misconducts, aiming to avoid adverse consequences, mitigate market reactions, and minimize harm to stakeholders. We also expect that institutional ownership strengthens this relationship. By analyzing a sample of European firms between 2015 and 2020, we found that boards with an ESG‐linked compensation policy reduce irresponsible actions, confirming the substantive role of ESG‐linked compensation in curbing ESG misconduct. Our findings also show a complementary effect of institutional investors in this association. Finally, we found that variations in negative ESG media coverage of misconducts that result from undertaking ESG‐linked compensation policy can be explained by differences in legal systems and stakeholder orientation between countries. Specifically, our results suggest that ESG‐linked compensation only plays a meaningful substantive role in constraining ESG wrongdoing in civil law countries and those characterized by greater public enforcement, increased control over corruption, and higher environmental awareness.

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通过做好事来避免伤害。ESG支付在防止ESG不当行为中的实质性作用

本文探讨了基于ESG的薪酬政策是否在预防公司ESG相关不当行为方面发挥了实质性或象征性的作用。我们预计，将ESG与董事会薪酬挂钩的公司将减少与ESG相关的不当行为，旨在避免不利后果，减轻市场反应，并最大限度地减少对利益相关者的伤害。我们还期望机构所有权能加强这种关系。通过分析2015年至2020年间的欧洲公司样本，我们发现，拥有ESG挂钩薪酬政策的董事会减少了不负责任的行为，这证实了ESG挂钩薪酬在遏制ESG不当行为方面的实质性作用。我们的研究结果还表明，机构投资者在这一关联中具有互补效应。最后，我们发现，由于实施与ESG相关的薪酬政策，媒体对不当行为的负面报道的差异可以用各国法律制度和利益相关者取向的差异来解释。具体而言，我们的研究结果表明，在大陆法系国家以及那些公共执法力度更大、对腐败控制力度更大、环境意识更高的国家，与ESG相关的薪酬只在约束ESG不法行为方面发挥了有意义的实质性作用。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Business Strategy and The Environment Multiple-

CiteScore

22.50

自引率

19.40%

发文量

336

期刊介绍： Business Strategy and the Environment (BSE) is a leading academic journal focused on business strategies for improving the natural environment. It publishes peer-reviewed research on various topics such as systems and standards, environmental performance, disclosure, eco-innovation, corporate environmental management tools, organizations and management, supply chains, circular economy, governance, green finance, industry sectors, and responses to climate change and other contemporary environmental issues. The journal aims to provide original contributions that enhance the understanding of sustainability in business. Its target audience includes academics, practitioners, business managers, and consultants. However, BSE does not accept papers on corporate social responsibility (CSR), as this topic is covered by its sibling journal Corporate Social Responsibility and Environmental Management. The journal is indexed in several databases and collections such as ABI/INFORM Collection, Agricultural & Environmental Science Database, BIOBASE, Emerald Management Reviews, GeoArchive, Environment Index, GEOBASE, INSPEC, Technology Collection, and Web of Science.