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AbstractAgainst the backdrop of driving global economic sustainability, corporate Environmental, Social, and Governance (ESG) performance has gradually emerged as a crucial theoretical and practical concern. This study aims to enrich the theoretical understanding of the correlation between corporate governance and ESG. Notably, the theoretical contribution is based on the relational contract theory, indicating the significance of the informal structure and implicit characteristics of the board of directors for corporate ESG performance. Using Chinese listed firms as samples, this study empirically examines and reveals a positive correlation between the informal board hierarchy and corporate ESG performance. Moreover, based on theoretical deduction, this study identifies internal control, innovation efficiency, and financial performance as important mechanisms through which the informal board hierarchy promotes corporate ESG performance. Further analysis indicates that in firms characterized by higher board interaction, lower shareholding concentration, and the combination of the roles of chairman and CEO, the promoting effect of the informal hierarchy on corporate ESG becomes significantly more pronounced. Our findings contribute to the understanding of relational contract theory in the field of corporate sustainability, enriching the literature on corporate governance and ESG, and providing decision‐making references and practical insights for optimizing corporate development.

AbstractIn the wave of the digital economy, supply chain digitalization is a visual manifestation of businesses integrating digital technology into their production and operations. It helps companies enhance operational efficiency and competitiveness, gradually becoming a key driver for corporate sustainable development. This study selects Chinese A‐share listed companies from 2012 to 2021 as research samples and empirically tests the impact of supply chain digitalization on corporate environment (E), social responsibility (S), and corporate governance (G) (ESG) performance. We find that supply chain digitalization significantly promotes corporate ESG performance, which is achieved by reducing information asymmetry and easing financing constraints. The positive effect of supply chain digitalization on corporate ESG performance varies significantly among different enterprises, with more prominent effects in mature enterprises, those at both ends of the industrial chain, and those located in regions with lower degree of marketization. Further analysis reveals that supply chain digitalization brings about an innovation effect for enterprises. These findings enrich the research on supply chain digitalization and corporate ESG performance, providing valuable insights for promoting supply‐side structural reforms and corporate sustainable development.

AbstractUsing Sino‐Securities Environmental, social, and governance (ESG) ratings data, we examine how environmental uncertainty affects the ESG performance of Chinese A‐share non‐financial listed firms from 2008 to 2020. Our findings show that environmental uncertainty harms corporate ESG performance. In particular, when environmental uncertainty increases, a firm's ESG score and ESG ratings decline due to factors such as financial constraints and industry competition. We argue that as the environmental risk premium rises, it increases the real options value of postponing sustainable investment for a firm. Consequently, the firms tend to cut down their ESG investment by weighing the long‐term benefits and short‐term direct costs. The value of real options changes with the investment opportunities available to the firms and the financing constraints and competitive pressure changes the size of investment opportunities. We argue that higher financing constraints and industry competition restrict available investment opportunities and dilute the negative impact of environmental uncertainty on corporate ESG performance. These results add to the existing literature investigating the impact of uncertainty on corporate ESG performance and offer insights to regulators and enterprise managers. These results are robust to alternate proxies of ESG performance and alternate regression techniques.

PurposeThe performance of corporations in sustainable development is not only a concern of investors, but has also captured ever-increasing attention from consumers. However, the evidence on how these good practices would ultimately benefit brands economically remains insufficient. This study tests the causal effect between corporate Environmental, Social, and Governance (ESG) performance, media coverage, and brand value to reveal the underlying mechanisms of how consumers would react to high ESG performance.Design/methodology/approachThis study uses panel data regression analysis with a sample of Chinese A-share non-financial listed companies from 2010 to 2021. ESG performance, brand value, and media coverage are assessed with Huazheng ESG Rating, the rankings from the China's 500 Most Valuable Brands' list published by the World Brand Lab, and media index compiled by the Chinese Research Data Services Platform (CNRDS) respectively.FindingsThis research confirmed that ESG performance positively impacted brand value in terms of profitability, and that media coverage played a role as a megaphone in this relationship. Large-scale corporates, compared to small ones, benefited more from good ESG ratings due to increased media coverage.Originality/valueThe findings provide evidence of the megaphone effect of media coverage on the relationship between firms' ESG engagements and brand value in the product market, which has extended the knowledge of media's monitoring role in the financial market. And this megaphone effect is strengthened by firm size in which larger firms have spotlight effect in draw public attention due to higher expectations in terms of social responsibility.

Previous studies suggest that the environmental, social and governance performance of companies helps to build a stronger image and reputation, thus providing better financial performance. However, the adoption of environmental, social and governance (ESG) practices as a tool for financial risk management is still little explored, especially in undeveloped economies. This research seeks to fill this gap by investigating whether the adoption of ESG practices reduces credit risk in publicly traded companies in Latin America. The results, obtained through an ordered logistic regression, considering the rating of the companies as a dependent variable and the indices of the ESG dimensions, obtained by the Refinitiv base, as explanatory variables, provide evidence that ESG practices are not being considered for the assignment of credit risk ratings from Moody's and Fitch agencies. Thus, ESG practices are not helping to reduce credit risk, especially when we consider Argentine and Peruvian companies. The results are robust, even when considering the capital structure, profitability, leverage, size, and asset turnover. Thus, the article contributes by showing that even with the advances of credit rating agencies in adopt ESG indicators, it is still not possible to observe an impact on credit risk reduction, as evidenced by the literature.