The Impact of ESG Performance on Stakeholder Decision-Making: An Empirical Study
Keywords:
ESG Performance, Stakeholder Decision-Making, Sustainability Reporting, Corporate Governance, Environmental and Social Responsibility, ESG DisclosureAbstract
This research explores how Environmental, Social, and Governance (ESG) performance affects the decision-making process of stakeholders through a quantitative research methodology. The study uses a secondary dataset, obtained on Kaggle, namely the S&P 500 ESG Risk Ratings Dataset, to assess ESG scores and their constituent parts, including the environmental, social, and governance, of 426 publicly listed companies. The data analysis was performed with Python, and it employed descriptive statistical analysis, correlation analysis, and multiple regression to test the relationships between the variables. The results indicate that ESG performance is closely related to stakeholder decision-making, with greater impact observed in environmental and social aspects than governance variables. The findings indicate that companies with a more impressive ESG performance are more likely to increase the confidence of stakeholders and aid in the process of informed decision-making. There are, however, methodological limitations identified in the study that are due to the use of proxy measures in decision-making by stakeholders, which could influence the strength of the statistical results. This study adds to the increasing literature on ESG by offering empirical data on how sustainability performance influences the behavior of stakeholders. The paper emphasizes the need to incorporate the ESG metrics in the corporate reporting and decision-making processes. It is suggested that future studies should use longitudinal data and direct measures of the stakeholders' decision-making to enhance the validity and applicability of the findings.
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