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Assessing sustainability-related performance of industrial firms: the promise of ESG data

The project explores the usefulness of data from Environmental, Social and Corporate Governance (ESG) indicators. For this purpose it appends traditional financial indicators to a substantial database of assessment of thousands of firms.

Background

Traditional accounting measures and financial indicators are designed to allow for comparison between firms across industries, countries and time regarding how well they perform in various dimensions. The scope of such indicators are, however, limited to strictly economic considerations. In getting to grips with sustainability transformations in industry, these types of data do not satisfy the analyst’s needs.

The deficit of existing data that can be used to track performance along dimensions of environmental and social sustainability has led to substantial efforts to invent and implement new standards of firm-level indicators. These go under the common name of Environmental, Social and Corporate Governance (ESG) indicators. Over the last few years, such indicators have found significant use among financial analysts that seek to evaluate to what extent a firm is exposed to risk stemming from its performance and exposure to sustainability issues.

Aims and objectives

ESG indicators are still developing rapidly in terms of definitions and in terms of the quality of the data underpinning such indicators. Already, however, they offer valuable new opportunities for analysis of sustainability transition in industry. As part of our work as coordinators and postdocs within IRIS, we explore the usefulness of ESG data. A substantial database of assessment of 10 000 firms over several years’ time has been acquired. We are currently working on appending traditional financial indicators to this database.

Project plan

The IRIS Area IV coordinators hope that the data resource and the competence built up around this type of data can be utilized by researchers and second- as well as third-level students at ITM. We are very interested to discuss opportunities with interested groups or individual colleagues. The data could for example be used to benchmark a Swedish firm or industry against their counterparts globally, or against each other. We see potential interest for this in the context e.g. of existing centers or master thesis projects, or in preparing applications for funding of new interdisciplinary research projects.

Applied interdisciplinarity

We see exchange around ESG data as a useful starting point for interdepartmental and interdisciplinary work on sustainability transitions.

Duration

Project participants