What Really Explains ESG Performance? Disentangling the Asymmetrical Drivers of the Triple Bottom Line

Organization & Environment, Forthcoming

29 Pages Posted: 20 Jan 2022 Last revised: 21 Mar 2022

See all articles by Logan Crace

Logan Crace

University of Alberta

Joel Gehman

George Washington University - Department of Strategic Management & Public Policy

Date Written: March 19, 2022

Abstract

Why is there such great heterogeneity in environmental, social, and governance (ESG) performance between firms? Drawing inspiration from the locus of performance literature, we use variance partitioning methods to analyze the extent to which CEO, firm, industry, year, and state effects explain variation in ESG performance over recent decades. Our findings show that internal effects (i.e., CEO and firm) are the strongest determinants. Yet, disaggregation of the multidimensional ESG construct shifts the saliency of the factors significantly, revealing the importance of the external environment (i.e., industry and year) in explaining ESG concerns. Our research extends the locus of performance literature to our understanding of the triple bottom line and contributes to understanding the complex determinants of firm-level ESG performance across an array of positive and negative ESG indicators.

Keywords: ESG, triple bottom line, locus of performance, sustainability

JEL Classification: M14, G24

Suggested Citation

Crace, Logan and Gehman, Joel, What Really Explains ESG Performance? Disentangling the Asymmetrical Drivers of the Triple Bottom Line (March 19, 2022). Organization & Environment, Forthcoming, Available at SSRN: https://ssrn.com/abstract=4011367

Logan Crace

University of Alberta ( email )

Edmonton, Alberta T6G 2R3
Canada

Joel Gehman (Contact Author)

George Washington University - Department of Strategic Management & Public Policy ( email )

Washington, DC 20052
United States

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