Do Titans Deliver the ESG Promise? Societal Recognition and Responsible Corporate Decisions

Abstract

Distinguished societal recognition can influence corporate decision-makers to act responsibly. We exploit this unique sociological attribute of UK firm board members and examine honorary titles' impact on the firm’s environmental, social, and governance (ESG) performances. Using the peerage and honorific titles of board members of public UK firms from 2002 to 2020, we demonstrate that firms wherein board members have a title of honour are associated with higher ESG performance. We also document a positive contagion effect of titleholders on other board members, which contributes to firms’ ESG performance. Our findings align with theories of resource dependence, upper echelons and peer effects postulations and highlight the importance of societal recognition in shaping corporate decisions towards sustainability.

Keywords: ESG, Title of Honor, Social identity, Social influence, Peerage system, Honorific, Board characteristics, corporate board governance

JEL Classification: G30,G38