Innovation over ESG Performance? The Trade-Offs of STEM Leadership in Top Sustainable Firms

Iman Harymawan (), Doddy Setiawan, Desi Adhariani and Atikah Azmi Ridha Paramayuda
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Iman Harymawan: Department of Accounting, Faculty of Economics and Business, Universitas Airlangga, Surabaya 60286, Indonesia
Doddy Setiawan: Department of Accounting, Faculty of Economics and Business, Universitas Sebelas Maret, Surakarta 57126, Indonesia
Desi Adhariani: Department of Accounting, Faculty of Economics and Business, Universitas Indonesia, Depok 16425, Indonesia
Atikah Azmi Ridha Paramayuda: Department of Accounting, Faculty of Economics and Business, Universitas Airlangga, Surabaya 60286, Indonesia

JRFM, 2025, vol. 18, issue 7, 1-22

Abstract: Considered as innovation-oriented, this research was conducted to examine whether STEM-educated CEOs drive better ESG performance. Using OLS regression, this research was conducted using listed companies assessed for their ESG performance on Sustainalytics in 2022 and identified as “top sustainable companies”, encompassing 1039 observations. The findings of this research reveal that STEM-educated CEOs are negatively associated with ESG performance in the top sustainable companies. Robustness analysis was also conducted to prevent endogeneity issues. This study introduces the novel idea of strategic trade-offs in ESG leadership. While STEM leaders drive innovation, their focus might lead to underinvestment in other crucial ESG aspects within already-sustainable firms. In addition, this research offers a contribution to governance and ESG research by bringing new insight on CEO selection for top ESG companies to better consider a balanced skillset beyond technological solutions.

Keywords: governance; STEM CEO; ESG rating; top sustainable; Sustainalytics (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2025
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