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ESG and reputation: The case of sanctioned Italian banks

Author

Listed:
  • Pina Murè
  • Marco Spallone
  • Fabiomassimo Mango
  • Stefano Marzioni
  • Lucilla Bittucci

Abstract

The aim of this paper is to investigate whether banks adopt Environmental, Social, and Governance (ESG) practices to reduce reputational damage due to financial penalties and whether the adoption of ESG factors can reduce the probability to receive sanctions. This study extends a previous research (Guerello et al., North American Journal of Economics and Finance, 2018, 48, 591–612) by including ESG scores as determinant of the probability to be sanctioned. The econometric analyses in this paper are based on a sample of 13 Italian banks for the years 2008–2018 and includes ESG scores provided by both Thomson Reuters and Bloomberg. The research shows that ESG score and the probability of sanctions are positively related. However, a careful analysis of causal directions clarifies the meaning of such positive relationship: receiving financial penalties is detrimental for banks reputations, therefore it's necessary for banks to improve their reputation through the adoption of ESG practices.

Suggested Citation

  • Pina Murè & Marco Spallone & Fabiomassimo Mango & Stefano Marzioni & Lucilla Bittucci, 2021. "ESG and reputation: The case of sanctioned Italian banks," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 28(1), pages 265-277, January.
    • Handle: RePEc:wly:corsem:v:28:y:2021:i:1:p:265-277
    DOI: 10.1002/csr.2047
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