Exploring Non-Financial Sustainability Performance

In the previous course we examine financial/quantitative economic sustainability performance (ESP). In this course, we discuss non-financial/qualitative environmental, ethical, social, and governance (EESG) sustainability performance, better known as corporate social responsibility (CSR).

Corporate social responsibility is considered an integral component of non-financial corporate sustainability performance. EESG activities can be viewed as activities that contribute to shareholder value creation or regarded as costly activities with a cost that is immediate and tangible and related benefits which may not materialize in the short-term and are often non-measurable. EESG activities are typically considered externalities beyond activities relevant to financial/economic sustainability performance and which can be viewed positively or negatively by shareholders.

Examples of positive externalities are diversity and independence of the board of directors, majority voting by shareholders, executive compensation linked to performance based on “say on pay” and “pay for performance” as part of corporate governance effectiveness, environmental initiatives regarding climate change and greenhouse gas emissions, high-quality and safe products, customer satisfaction, ethical workplaces, job creation and fair employment.

Examples of negative externalities are excessive risk-taking by executives, natural resource depletion, pollution, aggressive management and human rights abuses, child-labor, corruption, money laundering. 

Learning Objectives

• Explore the overall concept of environmental, ethical, social and governance (EESG) sustainability performance.

• Explore environmental, ethical, governance, and social sustainability performance and its KPIs.

• Explore environmental, ethical, governance, and social reporting, auditing, and assurance.

• Explore the relationship between EESG performance and firm value.