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ESG issues in emerging markets and the role of banks

Author

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  • Arun, Thankom
  • Girardone, Claudia
  • Piserà, Stefano

Abstract

We explore the most relevant forces impacting the shift towards more ESG-related strategies in emerging markets. These include the challenges of climate change, social inequalities, and stakeholder-oriented corporate governance. We focus on banks’ role in BRICS countries that are the biggest and fastest growing emerging markets economies over 2009-2020. We also discuss how the ESG agenda has been pushed by the United Nations (UN) and by regulators. Our evidence shows that banks’ specific adoption of international sustainability frameworks and agreements such as the Global Reporting Initiative (GRI) are significant drivers of ESG engagement. Moreover, we find that a stronger ESG regulatory approach enhances banks’ sustainability practices in BRICS countries, especially for those that have lower average ESG scores. Two main implications can be drawn from our study: (i) banks should be encouraged to adopt international frameworks which provide universal minimum standards for corporate responsibility; and (ii) to improve the overall ESG information environment, mandatory disclosure rules should be introduced at country level.

Suggested Citation

  • Arun, Thankom & Girardone, Claudia & Piserà, Stefano, 2021. "ESG issues in emerging markets and the role of banks," Essex Finance Centre Working Papers 30947, University of Essex, Essex Business School.
    • Handle: RePEc:esy:uefcwp:30947
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    Cited by:

    1. Ferriani, Fabrizio, 2023. "Issuing bonds during the Covid-19 pandemic: Was there an ESG premium?," International Review of Financial Analysis, Elsevier, vol. 88(C).
    2. Porzio, Claudio & Battaglia, Francesca, 2024. "Analyzing the role of sustainable investor in global systemically important banks and less significant institutions," Research in International Business and Finance, Elsevier, vol. 68(C).
    3. del Río, Cristina & Ferrer, Elena & López-Arceiz, Francisco J., 2024. "Analyst optimism and market sentiment: Evidence from European corporate sustainability reporters," Research in International Business and Finance, Elsevier, vol. 69(C).

    More about this item

    Keywords

    ESG Ratings; Environmental; Social and Governance Performance; Emerging Markets; BRICS Countries; Sustainable Practices Regulation;
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