The role of city network in improving corporate ESG scores: Evidence from the C40 network

Cities are increasingly prominent on the climate change map because they are more interconnected than ever. This study investigates whether and if so, how the C40 Cities Climate Leadership Group (C40) network influences corporate environmental, social, and governance (ESG) scores. Drawing upon the network embeddedness, we propose that the C40 improves the embedded firms' ESG/E scores. Our international evidence from a sample of 7206 firms across 84 countries confirms our hypotheses. Furthermore, we find that the Paris Agreement announcement can strengthen the positive relationship between the C40 and ESG/E scores, while financial slack can only enhance the C40-E score relationship. This study highlights the importance of the global city network in improving corporate sustainability performance and guides managers and policymakers to pursue a sustainability agenda.