ENVIRONMENTAL AND SOCIAL REPORTING IN CRISIS: LESSONS FROM ESG CONTROVERSIES AND SCANDALS

Andi Irfan, Ratna Suminaringtias

Abstract


Issues such as economic crisis, global warming, ideas of sustainability and governance have seen strong growth and improvement in the industry. The ESG (environmental, social, governance) index has attracted investors' attention to sustainable investment practices and measures the performance of companies' sustainability reports. Despite growing attention to environmental, social and governance (ESG) practices, little is known about the financial impact of poor social performance. Therefore, this research aims to highlight cases related to ESG controversies that occur in companies around the world. ESG controversies are defined as “corporate ESG news such as suspicious social behavior and product defect scandals that put a company under the media spotlight and, furthermore, attract the attention of investors.” This research aims to highlight cases related to ESG controversies that occur in companies throughout the world. To mitigate and avoid phenomena related to controversy, the role of business ethics is needed.  

Keywords


Enviromental Social Disclosure, ESG Controversies, Scandal

Full Text:

PDF

References


Amalia, R. and Kusuma, I.W. (2023) ‘Pengaruh Kinerja Lingkungan, Sosial, Dan Tata Kelola Terhadap Kinerja Pasar Dengan Kontroversi Esg Sebagai Variabel Pemoderasi’, ABIS: Accounting and Business Information Systems Journal, 11(2). Available at: https://doi.org/10.22146/abis.v11i2.84771.

Aouadi, A. and Marsat, S. (2018) ‘Do ESG controversies matter for firm value? Evidence from international data’, Journal of business ethics, 151, pp. 1027–1047.

Aurand, T.W. et al. (2018) ‘The VW diesel scandal: A case of corporate commissioned greenwashing’, Journal of Organizational Psychology, 18(1).

Aust, V., Morais, A.I. and Pinto, I. (2020) ‘How does foreign direct investment contribute to Sustainable Development Goals? Evidence from African countries’, Journal of Cleaner Production, 245, p. 118823. Available at: https://doi.org/https://doi.org/10.1016/j.jclepro.2019.118823.

Bogers, M., Chesbrough, H. and Strand, R. (2020) ‘Sustainable open innovation to address a grand challenge: Lessons from Carlsberg and the Green Fiber Bottle’, British Food Journal, 122(5), pp. 1505–1517.

Brinette, S., Sonmez, F.D. and Tournus, P.S. (2024) ‘ESG Controversies and Firm Value: Moderating Role of Board Gender Diversity and Board Independence’, IEEE Transactions on Engineering Management, 71, pp. 4298–4307. Available at: https://doi.org/10.1109/TEM.2023.3236667.

Bruna, M.G. and Nicolò, D. (2020) ‘Corporate reputation and social sustainability in the early stages of start-ups: A theoretical model to match stakeholders’ expectations through corporate social commitment’, Finance Research Letters, 35, p. 101508. Available at: https://doi.org/https://doi.org/10.1016/j.frl.2020.101508.

Carmo, Flávio Fonseca do et al. (2017) ‘Fundão tailings dam failures: the environment tragedy of the largest technological disaster of Brazilian mining in global context’, Perspectives in Ecology and Conservation, 15(3), pp. 145–151. Available at: https://doi.org/https://doi.org/10.1016/j.pecon.2017.06.002.

Centobelli, P., Cerchione, R. and Esposito, E. (2020) ‘Pursuing supply chain sustainable development goals through the adoption of green practices and enabling technologies: A cross-country analysis of LSPs’, Technological Forecasting and Social Change, 153, p. 119920. Available at: https://doi.org/https://doi.org/10.1016/j.techfore.2020.119920.

Chen, C.-D., Su, C.-H. (Joan) and Chen, M.-H. (2022) ‘Understanding how ESG-focused airlines reduce the impact of the COVID-19 pandemic on stock returns’, Journal of Air Transport Management, 102, p. 102229. Available at: https://doi.org/https://doi.org/10.1016/j.jairtraman.2022.102229.

Chen, H.-M., Kuo, T.-C. and Chen, J.-L. (2022) ‘Impacts on the ESG and financial performances of companies in the manufacturing industry based on the climate change related risks’, Journal of Cleaner Production, 380, p. 134951. Available at: https://doi.org/https://doi.org/10.1016/j.jclepro.2022.134951.

Cole, R., Johan, S. and Schweizer, D. (2021) ‘Corporate failures: Declines, collapses, and scandals’, Journal of Corporate Finance, 67, p. 101872. Available at: https://doi.org/https://doi.org/10.1016/j.jcorpfin.2020.101872.

Damette, O. and Kouki, I. (2022) ‘Political influence and banking performance: Evidence from the African countries’, The Quarterly Review of Economics and Finance, 84, pp. 200–207. Available at: https://doi.org/https://doi.org/10.1016/j.qref.2022.01.011.

DasGupta, R. (2022) ‘Financial performance shortfall, ESG controversies, and ESG performance: Evidence from firms around the world’, Finance Research Letters, 46, p. 102487. Available at: https://doi.org/https://doi.org/10.1016/j.frl.2021.102487.

Dawson, A. (2021) ‘The achilles heel of democracy? A macro cross-national assessment of the correlates of state legitimacy’, Social Science Research, 97, p. 102574.

Dorfleitner, G., Kreuzer, C. and Sparrer, C. (2020) ‘ESG controversies and controversial ESG: about silent saints and small sinners’, Journal of Asset Management, 21(5), pp. 393–412. Available at: https://doi.org/10.1057/s41260-020-00178-x.

Downs, C.A. et al. (2021) ‘Response to the Letter to the Editor by Dr. Christian Surber’, Chemical Research in Toxicology, 34(9), pp. 1938–1943. Available at: https://doi.org/10.1021/acs.chemrestox.1c00217.

Escamilla-Solano, S., Paule-Vianez, J. and Blanco-González, A. (2022) ‘Disclosure of gender policies: do they affect business performance?’, Heliyon, 8(1).

Febriawati, V. et al. (2023) ‘Sustainability Reporting Development: Embracing the Triple Bottom Line and SDGs’, in Proceeding International Conference on Economic and Social Sciences, pp. 212–227.

Ferrell, O.C. et al. (2019) ‘Business ethics, corporate social responsibility, and brand attitudes: An exploratory study’, Journal of Business Research, 95, pp. 491–501. Available at: https://doi.org/https://doi.org/10.1016/j.jbusres.2018.07.039.

Gao, J. et al. (2022) ‘Environmental, social and governance performance: Can it be a stock price stabilizer?’, Journal of Cleaner Production, 379, p. 134705. Available at: https://doi.org/https://doi.org/10.1016/j.jclepro.2022.134705.

Gistri, G., Corciolani, M. and Pace, S. (2018) ‘The interaction effect between brand identification and personal crisis relevance on consumers’ emotional reactions to a fashion brand crisis’, Journal of Global Fashion Marketing, 9(3), pp. 252–269. Available at: https://doi.org/10.1080/20932685.2018.1461021.

Irfan, A. et al. (2020) ‘The conceptual framework for Water accounting in sustainability of peatland ecosystems. An islamic perspective’, Journal of Environmental Management and Tourism, 11(3), pp. 589–593. Available at: https://doi.org/10.14505/jemt.v11.3(43).11.

Janney, J.J. and Gove, S. (2011) ‘Reputation and corporate social responsibility aberrations, trends, and hypocrisy: Reactions to firm choices in the stock option backdating scandal’, Journal of Management Studies, 48(7), pp. 1562–1585.

Larwood, J. (2011) ‘Rhetoric: naturally deceptive’, Fresh Voices: Composition at Cal Poly, 4(1), p. 26.

Lubis, Y.S. et al. (2023) ‘Consciousness of the Importance of Climate Accounting in Pursuing Sustainable Development Goals’, 1.

Meflinda, A. et al. (2018) ‘The effect of social capital and knowledge sharing to the small medium enterprise’s performance and sustainability strategies’, International Journal of Law and Management, 60(4), pp. 988–997. Available at: https://doi.org/10.1108/IJLMA-03-2017-0073.

Nightingale, A. (2009) ‘A guide to systematic literature reviews’, Surgery, 27(9), pp. 381–384. Available at: https://doi.org/10.1016/j.mpsur.2009.07.005.

Nirino, N. et al. (2021) ‘Corporate controversies and company’s financial performance: Exploring the moderating role of ESG practices’, Technological Forecasting and Social Change, 162, p. 120341. Available at: https://doi.org/https://doi.org/10.1016/j.techfore.2020.120341.

Nofianti, L. et al. (2018) ‘Environmental information disclosure and firm valuation: corporate governance as moderating variable’, International Journal of Engineering & Technology, 7, pp. 114–117. Available at: www.sciencepubco.com/index.php/IJET.

Nur, R.M., Andri, N. and Faiza, M. (2023) ‘PENGARUH GOOD CORPORATE GOVERNANCE, INTELLECTUAL CAPITAL, LEVERAGE, CORPORATE SOCIAL RESPONSIBILITY DAN GREEN ACCOUNTING TERHADAP KINERJA KEUANGAN’, 1(1), pp. 27–43.

Paré, G. and Kitsiou, S. (2017) ‘Methods for literature reviews’, in Handbook of eHealth evaluation: An evidence-based approach [Internet]. University of Victoria.

Passas, I. et al. (2022) ‘ESG Controversies: A Quantitative and Qualitative Analysis for the Sociopolitical Determinants in EU Firms’, Sustainability (Switzerland), 14(19), pp. 1–17. Available at: https://doi.org/10.3390/su141912879.

Passos, G. de A. and Campos-Rasera, P.P. de (2023) ‘As Controvérsias ESG Influenciam o Valor das Empresas? Uma Análise com Dados Longitudinais em Diferentes Países’, Brazilian Business Review, 21(4). Available at: https://doi.org/10.15728/bbr.2022.1326.pt.

Raimo, N. et al. (2020) ‘Non-financial information and cost of equity capital: An empirical analysis in the food and beverage industry’, British Food Journal, 123(1), pp. 49–65.

La Rosa, F. and Bernini, F. (2022) ‘ESG controversies and the cost of equity capital of European listed companies: the moderating effects of ESG performance and market securities regulation’, International Journal of Accounting and Information Management, 30(5), pp. 641–663. Available at: https://doi.org/10.1108/IJAIM-03-2022-0047.

Rotta, L.H.S. et al. (2020) ‘The 2019 Brumadinho tailings dam collapse: Possible cause and impacts of the worst human and environmental disaster in Brazil’, International Journal of Applied Earth Observation and Geoinformation, 90, p. 102119.

Santoro, G. et al. (2020) ‘Exploring the relationship between entrepreneurial resilience and success: The moderating role of stakeholders’ engagement’, Journal of Business Research, 119, pp. 142–150.

Saxena, S. (2015) ‘Are they really green: flipping the second side of green marketing coin-a critical analysis using selected cases’, Amity Global Business Review, 10(4), pp. 110–113.

Siano, A. et al. (2017) ‘“More than words”: Expanding the taxonomy of greenwashing after the Volkswagen scandal’, Journal of Business Research, 71, pp. 27–37. Available at: https://doi.org/https://doi.org/10.1016/j.jbusres.2016.11.002.

Snyder, H. (2019) ‘Literature review as a research methodology: An overview and guidelines’, Journal of Business Research, 104(July), pp. 333–339. Available at: https://doi.org/10.1016/j.jbusres.2019.07.039.

Surana, K., Singh, A. and Sagar, A.D. (2020) ‘Strengthening science, technology, and innovation-based incubators to help achieve Sustainable Development Goals: Lessons from India’, Technological Forecasting and Social Change, 157, p. 120057. Available at: https://doi.org/https://doi.org/10.1016/j.techfore.2020.120057.

Tardivo, G., Santoro, G. and Ferraris, A. (2017) ‘The role of public-private partnerships in developing open social innovation: the case of GoogleGlass4Lis’, World Review of Entrepreneurship, Management and Sustainable Development, 13(5–6), pp. 580–592.

Utz, S. (2019) ‘Corporate scandals and the reliability of ESG assessments: evidence from an international sample’, Review of Managerial Science, 13(2), pp. 483–511. Available at: https://doi.org/10.1007/s11846-017-0256-x.

Walsh, G. et al. (2009) ‘Examining the antecedents and consequences of corporate reputation: A customer perspective’, British journal of management, 20(2), pp. 187–203.

Wouter, B. and Visser, S. (2021) ‘The impact of a scandal on a firm ’ s ESG performance’.

Xue, R. et al. (2023) ‘The adverse impact of corporate ESG controversies on sustainable investment’, Journal of Cleaner Production, 427(October), p. 139237. Available at: https://doi.org/10.1016/j.jclepro.2023.139237.

Yulianti, R. et al. (2023) ‘The Unfolding of E . S . G . Investment as a Realization of Sustainable Development Goals’, 1.




DOI: https://doi.org/10.29103/j-mind.v9i2.16848

Article Metrics

 Abstract Views : 25 times
 PDF Downloaded : 4 times

Refbacks

  • There are currently no refbacks.


Copyright (c) 2024 ANDI IRFAN, Ratna Ratna Suminaringtias

Creative Commons License
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Creative Commons License
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

P-ISSN: 2503-4367
E-ISSN: 2997-3948



Publisher :
Master's Program in Management Science  
Faculty of Economics and Business Malikussaleh University 

Address:
Tgk. Chik Di Tiro Street No. 26 Lancang Garam,
Lhokseumawe, Aceh, Indonesia


Lhokseumawe Aceh Indonesia

  Flag Counter

View My Stats