CEU Electronic Theses and Dissertations, 2021
| Author | Tsoy, Viktoriya |
|---|---|
| Title | Do ESG ratings capture public accountability of companies? |
| Summary | The ESG financial framework has appeared in response to the growing demand from consumers of financial products to provide them with more information about the sustainability and corporate responsibility of the companies. It is supposed to allow investors to make a more informed and conscious decision with their limited resources and no access to full information about all the processes of each company. It works well as a shortcut, however, there are certain areas where not all the possible social and environmental impacts have been taken into consideration, as it would overcomplicate the calculation of ESG ratings. As the system is growing and attracting more finances, it needs to be constantly improved and these issues need to be detected and fixed. In this paper, I’m focusing on the aspect of public accountability, or, in other words, I consider how company activities affect the employees, local communities, and global community, and see whether these effects are reflected well in a company’s ESG rating. I use the fixed effects econometric model on companies included in three large global financial indices over the last 5 years, to account for individual characteristics and time trends. The results show that three selected metrics for public accountability, namely research and development contribution, number of people hired, and taxes paid, are not perfectly reflected in the current model of ESG. However, the absolute values of the negative effects are low and are not likely to affect money flow distributions between different companies. Proposed policy solutions include reconstructing ESG factors by including more details into the Social dimension, expanding the ESG indices to allow more companies to receive green financing, and promoting more transparency and disclosure through regulations on a governmental level. |
| Supervisor | Akbar, Yusaf Hussein |
| Department | Economics MA |
| Full text | https://www.etd.ceu.edu/2021/tsoy_viktoriya.pdf |
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