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Does ESG contracting align or compete with stakeholder interests?

Maria Gaia Soana

Journal of International Financial Markets, Institutions and Money, 2024, vol. 96, issue C

Abstract: The paper investigates whether ESG-linked managerial incentives, also known as ESG contracting, align or compete with stakeholder interests in the banking sector. The few related literature, focussed on non-financial companies, shows arguments both pro and against pay for sustainability. Using a panel data set of 595 worldwide listed banks for the period 2010–2021, the paper studies the effectiveness of ESG incentives in improving ESG performance and limiting ESG controversies. ESG contracting is shown to improve both ESG performance and ESG disputes, thus suggesting that it is more symbolic than substantial in meeting stakeholder interests. ESG strategy, ESG committee and managerial risk-taking are significant channels through which ESG incentives affect ESG performance and ESG controversies in the banking sector.

Keywords: ESG-linked incentives; Bank stakeholders; ESG performance; ESG controversies (search for similar items in EconPapers)
JEL-codes: G21 G34 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:intfin:v:96:y:2024:i:c:s1042443124001240

DOI: 10.1016/j.intfin.2024.102058

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Journal of International Financial Markets, Institutions and Money is currently edited by I. Mathur and C. J. Neely

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