Sustainable Consumption and Production, Climate Change and Firm Performance

Journal of Impact & ESG Investing Winter 2021, 2(2), 8-34 Available at https://jesg.pm-research.com/content/2/2/8

2 Pages Posted: 8 Jul 2021 Last revised: 5 Jan 2022

See all articles by Maretno A. Harjoto

Maretno A. Harjoto

Pepperdine University - Pepperdine Graziadio Business School (PGBS)

Clemens Kownatzki

Pepperdine University - Graziadio School of Business and Management

Jillian Alderman

Pepperdine University - Graziadio School of Business and Management

Robert Lee

Graziadio School of Business - Pepperdine University

Date Written: July 6, 2021

Abstract


Transitioning into a resource-efficient and low-carbon emission economy is one of the most critical demands in our modern society. Using TRUCOST environmental and Paris alignment data from the S&P Global Market Intelligence, this study examines the firm-level alignment between ESG scores and firms’ sustainable business practices in consumption, production, and climate change from 2005 to 2018. This study finds that firms’ overall ESG scores are aligned with sustainable consumption, production, and climate action. Specifically, the environmental aspect of ESG is aligned with firms’ sustainable consumption, production, and climate action while social and governance aspects of ESG are not. As investors and corporate managers are paying more attention to firms’ ESG scores, this study provides insights for asset managers who rely on ESG for their investment selection and corporate managers who attempt to improve firms’ ESG performance on sustainable consumption, production, and climate change initiatives. This study also finds strong evidence that firms’ sustainable consumption, production, and climate action offer 0.3% to 0.8% annualized excess stock returns for a one percent increase in firms’ ability to meet these goals. Hence, our findings provide insight into how firms’ sustainable consumption, production, and climate action can impact the investment community as well as firms’ stakeholders.

Keywords: ESG and UNSDG alignment; sustainable consumption and production; climate action; firm performance; stock return

JEL Classification: M14, Q51, Q53, Q55, G11

Suggested Citation

Harjoto, Maretno Agus and Kownatzki, Clemens and Alderman, Jillian and Lee, Robert, Sustainable Consumption and Production, Climate Change and Firm Performance (July 6, 2021). Journal of Impact & ESG Investing Winter 2021, 2(2), 8-34 Available at https://jesg.pm-research.com/content/2/2/8, Available at SSRN: https://ssrn.com/abstract=3881134 or http://dx.doi.org/10.2139/ssrn.3881134

Maretno Agus Harjoto (Contact Author)

Pepperdine University - Pepperdine Graziadio Business School (PGBS) ( email )

Drescher Campus Suite 344
24255 Pacific Coast Highway
Malibu, CA 90263
United States
(310) 506-8542 (Phone)
(310) 506-4126 (Fax)

HOME PAGE: http://scholar.google.com/citations?hl=en&user=9-PfQi0AAAAJ

Clemens Kownatzki

Pepperdine University - Graziadio School of Business and Management ( email )

Malibu, CA
United States

Jillian Alderman

Pepperdine University - Graziadio School of Business and Management ( email )

Malibu, CA
United States

Robert Lee

Graziadio School of Business - Pepperdine University ( email )

Malibu, CA
United States
310-506-8541 (Phone)
310-506-4126 (Fax)

HOME PAGE: http://bschool.pepperdine.edu/faculty/default.php?faculty=robert_lee

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