Influence of Environmental, Social and Governance Practices on the Performance of Brazilian Companies




Firm concerns with Environmental, Social and Governance (ESG) issues have become relevant to society. As a result, it seems that firms have started to pay attention to these actions, trying to integrate them into their strategy. It has been suggested that better firm ESG standard, in addition to contributing to improving management, is capable of generating favorable sensitivity among firm stakeholders, and thus favoring its performance. This work aims to investigate the influence of engagement in ESG practices on the performance of Brazilian firms. The work uses a relevant sample of 685 firm-year observations of 85 firms listed on the Brazilian Stock Exchange (B3) that are assessed by CSRhub Consensus ESG Ratings. Two proxies ESG are used: the CSRhub assessment and presence on the ISE (Sustainability Index). Financial performance (ROA and ROE) and the firm market value, measured by Tobin's Q, proxy for firm performance. Model estimates provide results signaling that, in Brazil, higher ESG standard boosts firm performance. Results are robust to the two proxies for ESG and the three proxies for firm performance. These findings indicate that, in fact, ESG appears to be capable of improving the firm management and, in parallel, generating positive sensitivity among firm stakeholders, which favors the virtuous cycle among the firm and its stakeholders which may lead to better performance.

Author Biography

Vicente Lima Crisóstomo, Universidade Federal do Ceará

Professor da Universidade Federal do Ceará. Doutorado em Economia Financeira pela Universidade de Valladolid/Espanha. Mestre em Ciências da Computação pela Universidade Federal de Santa Catarina. Graduado em Ciências Contábeis e Ciências da Computação pela Universidade Federal do Ceará.