Measuring inequality in the adoption of ESG scores by small and medium enterprises

Alessandra Amendola, Adelaide Emma Bernardelli and Paolo Giudici

International Review of Economics & Finance, 2025, vol. 103, issue C

Abstract: This paper proposes a novel methodology to assess the adoption of Environmental, Social, and Governance (ESG) criteria by Small and Medium-Sized enterprises (SMEs), measuring the inequality in ESG scores as a proxy for their uneven diffusion across firms and sectors. Rather than focusing solely on average ESG performance, we argue that inequality captures critical disparities that reveal structural barriers to adoption. To quantify these disparities, we employ the Gini index, and to explain them, we compare alternative machine learning models and simple Linear Regressions, evaluating their performance through residual analysis, including the calculation of the residual Gini indices. We apply this framework to a sample of over 1,000 Italian SMEs across various sectors. The findings reveal significant heterogeneity in ESG practices, with marked sectoral differences. This approach helps identifying where targeted policy interventions are most needed to promote more inclusive and balanced sustainable development among SMEs.

Keywords: ESG factors; Inequality; Machine learning models (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:103:y:2025:i:c:s1059056025006859

DOI: 10.1016/j.iref.2025.104522

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