Sensitive industries produce a better ESG performance: Evidences from emerging markets

This paper investigates whether the financial profile of the firm is associated with superior environmental, social and governance (ESG) performance. By analyzing firms from Brazil, Russia, India, China and South Africa (The so-called BRICS countries), which operate in sensitive industries (i.e.: those subject to systematic social taboos, moral debates, and political pressures, and that are more likely to cause social and environmental damage), we aimed at addressing a relevant research gap. In order to test our hypotheses, we used the ASSET4 ESG database to analyze data from 365 listed companies, selected from the BRICS between 2010 and 2012. The results suggest that companies in sensitive industries present superior ESG performance, even when variables for the firm’s size and country were controlled. Our study contributes to both research about the impact of ESG disclosure, and the relationship between financial and ESG performance, as well to the practice of sustainability management in firms.