ESSEC - Amundi Chair on Asset & Risk Management
"ESG, Lobbying and Firm's Misconduct"
March 29, 2023
Corporate Ethics is a crucial aspect evaluated in Environmental, Social, and Governance (ESG) assessments because it provides information on a company's ethical behavior, which is seen as a key factor in determining its sustainability and long-term success. It is essential to comprehend a company's commitment to ethical principles and how it manages issues that have significant environmental and societal implications, such as lobbying activities related to climate regulation. This webinar presents novel evidence on corporate misconduct or lobbying activities in climate regulation.
16.30 - 17.15: "Green or Greed? Corporate Donations to Politicians and their Votes on Environmental Legislations"
Guosong Xu, Erasmus University, Rotterdam School of Management
17.15 - 18.00: "The Social Geography of Misconduct"
Santiago Truffa, ESE Business School
A first paper presented by Guosong Xu examines how firms intervene in the political process regarding the adoption of environmental laws. The paper provides strong evidence that “green” firms donates to traditional politicians against pro-environmental legislations. This behavior is mainly driven by pecuniary motives (cost-cutting of environmental regulations). A second paper presented by Santiago Truffa focuses on the misconduct of firms relative to what can be expected from society. They explore the importance of peer effects from board members on the likelihood of firms to misbehave. The later is shown to increase with social and physical proximity to firms exhibiting similar past behavior. The effect is particularly strong when firms are linked by the proximity of the top management.
These two studies offer novel insights into the actions of individual companies and highlight the significance of taking into account social and governance factors for investment decisions.