The Effects of Short-termism on Firm’s ESG

Zhenjiang Yan ()
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Zhenjiang Yan: Puyang No.1 Senior High School

A chapter in Proceedings of the 2025 International Conference on Hybrid Commerce, Human Capital, and Economic Dynamics (ICHCH 2025), 2026, pp 952-958 from Springer

Abstract: Abstract This study examines how managerial short-termism shapes corporate Environmental, Social, and Governance (ESG) outcomes. Pressures from career horizons and performance evaluation steer attention toward visible and easily scored outputs, shifting budgets away from engineering upgrades such as energy efficiency retrofits and emissions abatement technologies toward expanded reporting and award seeking. The shift induces resource misallocation, a separation between narrative disclosure and operational performance, financing contracts that place excessive weight on soft indicators, and negative spillovers to supply chains and organizational capabilities. This study proposes redesigning incentives around a small set of hard metrics, measured as improvement relative to a baseline within a unified measurement protocol with independent assurance that links disclosures to auditable operational data. These hard metrics should be written into financing and procurement contracts and supported by cross functional data and project management systems so that ratings become a natural by product of engineering progress rather than a public relations narrative. Under rising carbon prices and tighter regulation this approach lowers the cost of concentrated compliance and reputational risk, builds durable engineering capability and resilience, and better aligns external scores with underlying governance quality.

Keywords: Short-termism; ESG; Firm (search for similar items in EconPapers)
Date: 2026
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DOI: 10.2991/978-2-38476-585-0_107

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