Environmental, social, governance (ESG) e desempenho corporativo: uma análise na perspectiva da folga financeira e da remuneração dos executivos

Abstract

The growing attention given to issues linked to sustainability led to an increase in the dissemination of information related to environmental, social and governance initiatives. In this context, has much discussed in the literature on whether ESG disclosures contribute to or burden corporative performance and assess the possible intermediates. Financial slack can bring greater flexibility with the application of resources, being able to use them in ESG activities. In turn, executive compensation can act as an alignment mechanism in suppressing conflict of interest between agent and principal, promoting sustainable activities. Thus, this research aims to analyze the moderating effect of financial slack and executive compensation on the relationship between ESG and economic-financial and market performance in Brazilian companies. The unbalanced sample consisted of 107 companies listed in Brasil, Bolsa, Balcão (B3), from 2016 to 2021, totaling 483 annual observations. For data analysis, linear regression by Ordinary Least Squares (OLS) was performed. Overall, the results indicated that ESG activities (general and environmental, social and governance pillars) positively impact corporate performance (economic-financial: ROA and ROE; and, market: Tobin's Q and Market to Book) in Brazilian companies, in addition to financial slack and executive compensation, driving the relationship between ESG and corporate performance. These results indicate that organizations with surplus resources and adequate compensation mechanisms drive environmental, social and governance actions and, consequently, generate positive returns in corporate performance. However, two possibilities can be assumed: the existence of surplus resources is more relevant than a consolidated remuneration policy, or the practices performed by the analyzed companies are not to meet all aspects of salary incentives capable of boosting the relationship between ESG and corporate performance. Such presumption is due to the most predominant effects of the variable financial slack in the analyzed relationships. Furthermore, due to the low significance obtained in the relationship with the governance score, it can be assumed that this pillar lacks implementation points or those already applied are not being properly executed. The findings of this research encourage sustainable investments and seeks to promote the continuity of Brazilian companies, given the beneficial effects of ESG practices on corporate performance. In addition, the results contribute to investors and shareholders by revealing that they must consider the business characteristics when deciding on their investments, to analyze with greater caution for contexts of the scarcity of resources, lower ESG indexes, and executive remunerations that they do not generate congruence between the executive's organizational and personal objectives.