ESG Importance for Long-Term Shareholder Value Creation: Literature vs. Practice
This article aims to detect how ESG adds value to the long-term shareholder value creation and to discover whether businesses are aware of positive ESG effects and, therefore, whether they will become more ESG-conscious. By conducting a qualitative content analysis on the academic literature, this a...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
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Elsevier
2021-05-01
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| Series: | Journal of Open Innovation: Technology, Market and Complexity |
| Subjects: | |
| Online Access: | https://www.mdpi.com/2199-8531/7/2/127 |
| _version_ | 1827614173081632768 |
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| author | Ilze Zumente Jūlija Bistrova |
| author_facet | Ilze Zumente Jūlija Bistrova |
| author_sort | Ilze Zumente |
| collection | DOAJ |
| description | This article aims to detect how ESG adds value to the long-term shareholder value creation and to discover whether businesses are aware of positive ESG effects and, therefore, whether they will become more ESG-conscious. By conducting a qualitative content analysis on the academic literature, this article firstly aims to determine if shareholders’ value is positively affected by corporate ESG awareness. Secondly, to test whether companies are becoming more conscious about the importance of ESG, the mission statements of publicly listed Central and Eastern European (CEE) companies are compared to their decade-old versions. This analysis allows us to conclude on whether companies have shifted their attention to the ESG factors as a part of their purpose of existence and, therefore, for long-term shareholder value creation, which is one of the main goals of the exchange-listed enterprises. The content analysis results show that companies with higher sustainability awareness ensure shareholder value creation via improved financial performance, management quality as well as reduced risk metrics. Additionally, qualitative nonfinancial factors such as reputation, stakeholder trust, employee satisfaction and engagement provide an even more significant effect on the long-term value than the pure financial matters. The theoretical trend is found to be supported by the fact that sustainability practice and consumer-oriented keywords dominate the mission statements of CEE companies, while keywords related to shareholders and profit experienced the most significant decrease from 2012 to 2021. The present research is unique as it looks at how companies tend to become more ESG aware, integrating the sustainability perspective into their mission statements in response to the global sustainability trend. |
| first_indexed | 2024-03-09T08:50:52Z |
| format | Article |
| id | doaj.art-59245baa8a9b444b9f0e9c9a5580f416 |
| institution | Directory Open Access Journal |
| issn | 2199-8531 |
| language | English |
| last_indexed | 2024-03-09T08:50:52Z |
| publishDate | 2021-05-01 |
| publisher | Elsevier |
| record_format | Article |
| series | Journal of Open Innovation: Technology, Market and Complexity |
| spelling | doaj.art-59245baa8a9b444b9f0e9c9a5580f4162023-12-02T14:13:33ZengElsevierJournal of Open Innovation: Technology, Market and Complexity2199-85312021-05-01712712710.3390/joitmc7020127ESG Importance for Long-Term Shareholder Value Creation: Literature vs. PracticeIlze Zumente0Jūlija Bistrova1Faculty of Engineering Economics and Management, Riga Technical University, LV-1048 Riga, LatviaFaculty of Engineering Economics and Management, Riga Technical University, LV-1048 Riga, LatviaThis article aims to detect how ESG adds value to the long-term shareholder value creation and to discover whether businesses are aware of positive ESG effects and, therefore, whether they will become more ESG-conscious. By conducting a qualitative content analysis on the academic literature, this article firstly aims to determine if shareholders’ value is positively affected by corporate ESG awareness. Secondly, to test whether companies are becoming more conscious about the importance of ESG, the mission statements of publicly listed Central and Eastern European (CEE) companies are compared to their decade-old versions. This analysis allows us to conclude on whether companies have shifted their attention to the ESG factors as a part of their purpose of existence and, therefore, for long-term shareholder value creation, which is one of the main goals of the exchange-listed enterprises. The content analysis results show that companies with higher sustainability awareness ensure shareholder value creation via improved financial performance, management quality as well as reduced risk metrics. Additionally, qualitative nonfinancial factors such as reputation, stakeholder trust, employee satisfaction and engagement provide an even more significant effect on the long-term value than the pure financial matters. The theoretical trend is found to be supported by the fact that sustainability practice and consumer-oriented keywords dominate the mission statements of CEE companies, while keywords related to shareholders and profit experienced the most significant decrease from 2012 to 2021. The present research is unique as it looks at how companies tend to become more ESG aware, integrating the sustainability perspective into their mission statements in response to the global sustainability trend.https://www.mdpi.com/2199-8531/7/2/127disclosuresCEEESGfirm valueshareholder valuesustainability |
| spellingShingle | Ilze Zumente Jūlija Bistrova ESG Importance for Long-Term Shareholder Value Creation: Literature vs. Practice Journal of Open Innovation: Technology, Market and Complexity disclosures CEE ESG firm value shareholder value sustainability |
| title | ESG Importance for Long-Term Shareholder Value Creation: Literature vs. Practice |
| title_full | ESG Importance for Long-Term Shareholder Value Creation: Literature vs. Practice |
| title_fullStr | ESG Importance for Long-Term Shareholder Value Creation: Literature vs. Practice |
| title_full_unstemmed | ESG Importance for Long-Term Shareholder Value Creation: Literature vs. Practice |
| title_short | ESG Importance for Long-Term Shareholder Value Creation: Literature vs. Practice |
| title_sort | esg importance for long term shareholder value creation literature vs practice |
| topic | disclosures CEE ESG firm value shareholder value sustainability |
| url | https://www.mdpi.com/2199-8531/7/2/127 |
| work_keys_str_mv | AT ilzezumente esgimportanceforlongtermshareholdervaluecreationliteraturevspractice AT julijabistrova esgimportanceforlongtermshareholdervaluecreationliteraturevspractice |