How to explain stock returns of utility companies from an environmental, social and corporate governance perspective

RESEARCH ARTICLE
How o explain s ock e u ns o u ili y companies om an
en i onmen al, social and co po a e go e nance pe spec i e
M.
´
Angeles L
opez-Caba cos
1
| Helena San os-Rod igues
2
|
La a Quiñoá-Piñei o
1
| Juan Piñei o-Chousa
3
1
Depa men o Business Adminis a ion,
Uni e sidade de San iago de Compos ela,
Lugo, Spain
2
Escola Supe io de Tecnologia e Ges ˜ao,
Ins i u o Poli écnico de Viana do Cas elo,
Viana do Cas elo, Po ugal
3
Depa men o Accoun ing and Finance,
Uni e sidade de San iago de Compos ela,
Lugo, Spain
Co espondence
La a Quiñoá-Piñei o, Facul y o Business
Adminis a ion, Uni e sidade de San iago de
Compos ela, Al onso X El Sabio, s/n. 27002
Lugo, Spain.
Email: [email p o ec ed]
Funding in o ma ion
Minis e io de Uni e sidades del Gobie no de
España, G an /Awa d Numbe : FPU19/01233
Abs ac
Sus ainabili y is a majo challenge in oday's business wo ld, making en i onmen al,
social and go e nance c i e ia an indispensable ool o business managemen and
in es men decisions. Using 2020 da a o 47 companies om he STOXX Eu ope
To al Ma ke U ili ies Index and quali a i e compa a i e analysis, his s udy aims o
analyse how he combina ion o CO
2
equi alen emissions, sus ainabili y compensa-
ion incen i es, en i onmen al in es men s, en i onmen managemen aining, and
policy ai compe i ion leads o u ili y companies' s ock ma ke e u ns. Two subsam-
ple models (elec ici y and non‐elec ici y u ili ies) ha e been conside ed in he s udy.
The esul s poin o he absence o CO
2
equi alen emissions, he absence o incen-
i es, and he p esence o en i onmen al in es men as key a iables o lead o s ock
ma ke e u ns. The indings p o ide ele an in o ma ion o manage s and p ac i-
ione s o u ili ies indus y o achie e imp o emen s in he en i onmen al, social and
go e nance managemen p ac ices, main aining p o i abili y in inancial ma ke s and
acili a ing decision‐making o in es o s.
KEYWORDS
business s a egy, en i onmen al pe o mance, ESG p ac ices, s ock e u ns, sus ainable
de elopmen , u ili ies indus y
1|INTRODUCTION
In a wo ld co ne ed by he global eme gency o clima e change and
ch onic sho ages o clean ai , esh wa e , ood o ene gy, e o s o
hal he deg ada ion o he plane and he de e io a ion o social well-
being equi e a s ong and sus ained in e na ional commi men . A
Eu opean le el, egula o y e o s o add ess hese cu en and u u e
challenges ha e been in ensi ied (Busch e al., 2022), while socie y's
expec a ions and equi emen s demand a de e mined business ac ion
and he es ablishmen o a new business pa adigm based on sus ain-
able p inciples. In his con ex , he u ili ies indus y—which includes
he elec ici y, gas, wa e and mul i-u ili ies sec o s, as well as was e
and disposal se ices sec o —has gained inc easing a en ion o he
success ul and sus ainable de elopmen o mode n socie ies (Ago ino
e al., 2021; Gila doni, 2020; Pais-Magalh˜aes e al., 2021). Al hough
u ili y companies play an in aluable ole in p o iding economies wi h
essen ial public goods and se ices (Giacomini e al., 2020), hei ac i -
i y is no wi hou con o e sy, due o i s la ge con ibu ion o he cli-
ma e c isis (Gila doni, 2020). U ili y companies a e now acing he
challenge o compe e in ma ke s whe e simul aneously ha e o c ea e
alue o hei s akeholde s, whose demands ha e o ced hem o
ede ine hei wo king p ac ices and business models by ini ia ing
Recei ed: 26 No embe 2022 Re ised: 17 Feb ua y 2023 Accep ed: 6 Ma ch 2023
DOI: 10.1002/cs .2483
This is an open access a icle unde he e ms o he C ea i e Commons A ibu ion-NonComme cial-NoDe i s License, which pe mi s use and dis ibu ion in any
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© 2023 The Au ho s. Co po a e Social Responsibili y and En i onmen al Managemen published by ERP En i onmen and John Wiley & Sons L d.
Co p Soc Responsib En i on Manag. 2023;1–14. wileyonlinelib a y.com/jou nal/cs 1
ac ions aimed a encou aging a ansi ion owa ds a g een and sus-
ainable de elopmen (Nguyen e al., 2021). Among hese en i on-
men al, social and go e nance (ESG) ac ions a e (i) p og ess owa ds
deca bonisa ion and he es ablishmen o ne -ze o a ge s (Busch &
Lewandowski, 2018); (ii) linkage o execu i es' a iable emune a ion
o he ul ilmen o sus ainabili y and co po a e social esponsibili y
(CSR) a ge s (Minciullo e al., 2022); (iii) commi men o p oac i e
en i onmen al in es men s o ackle ex eme wea he e en s and
global isks, as well as inc ease u u e oppo uni ies (A i a
e al., 2020); (i ) implemen a ion o g een aining p og ammes
(Ma ucci, Iannone, e al., 2022); and ( ) es ablishmen o codes o
conduc ha p omo e ai compe i ion (Qi e al., 2022). This has led
ESG issues climbing posi ions wi hin o ganisa ions, en e ing he co -
po a e agenda o companies and becoming benchma ks o business
sus ainabili y (Ri z, 2022). As a esul , ESG sco es ha e become an
indispensable in es men decision-making ool by collec ing and
agg ega ing in o ma ion ha allows companies o be assessed on he
basis o hei ESG pe o mance (Be g e al., 2019), and p o iding a
measu e o a company's esponsible beha iou (Dyck e al., 2019).
Howe e , he ESG sco es ha e ce ain sho comings. One o
hem ela es o he di e gence in he a ings published by he ESG
da a-p o iding agencies (Be g e al., 2019). Acco dingly, he Bank o
In e na ional Se lemen s has sugges ed decons uc ing he h ee ESG
a ing pilla s o allow in es o s o make a de ailed and di e en ia ed
assessmen o he ESG pe o mance o he companies o asse s in
which hey wish o in es (Ehle s e al., 2022).
Mos p e ious esea ch on ESG has ocused on non- inancial
issues o business managemen . Li le esea ch has s udied he impac
o ESG on speci ic inancial measu es as ROA, ROE, p o i s, Tobin's Q
(B
a ae e al., 2021; Yoo & Managi, 2022), i m alue (Fa emi
e al., 2018); o s ock e u ns (Feng e al., 2022; La To e e al., 2020;
M
anescu, 2011; Yoo e al., 2021). Less esea ch has s udied he e ec
o ESG measu es independen ly conside ed— o example, g eenhouse
gas (GHG) emissions (Busch e al., 2022; Choi & Luo, 2021), en i on-
men al in es men (G assmann, 2021; Sil a-Gao, 2012); employees'
g een aining (Kwon, 2019; Yoo e al., 2022), ai compe i ion policies
(Le Roy e al., 2017); o he linkage o non- inancial a ge s o execu-
i e compensa ion (Bachmann e al., 2020; Gan e al., 2020)—on i m
pe o mance. The ac ha p e ious esea ch concludes mixed esul s
and ha he e a e e y ew s udies conside ing he u ili ies indus y
jus i ies he aim o his pape ha p opose a disagg ega ed analysis o
he ESG pilla s o analyse hei e ec on u ili ies indus y's s ock
e u ns. Thus, his s udy aims o ill his gap by analysing how he
combina ion o i e ESG indica o s—CO
2
equi alen emissions, sus-
ainabili y compensa ion incen i es, en i onmen al in es men s, en i-
onmen managemen aining and policy ai compe i ion—leads o
he p esence o s ock ma ke e u ns in he Eu opean u ili ies indus-
y. Fo his pu pose, ESG and s ock ma ke da a o he yea 2020
we e ga he ed om a sample o 47 u ili y companies included in he
STOXX Eu ope To al Ma ke U ili ies Index. The da a was analysed
using uzzy se quali a i e compa a i e analysis ( sQCA). To examine
he po en ial disc epancies, he sample was spli in o wo subsamples
o conside elec ici y and non-elec ici y u ili ies (gas, wa e and
mul i-u ili ies and was e and disposal se ices sec o s), conside ing
he key ole ha he elec ici y sec o is expec ed o play in he
Eu opean ene gy ansi ion (Ribei o e al., 2023).
The esea ch indings a e ele an o unde s anding how compa-
nies can manage hei e o s o achie e be e inancial and ESG pe -
o mance and help hem ecognise which combina ions o ESG
ac o s mo i a e in es o s and d i e companies' s ock ma ke pe o -
mance. In his way, he pape con ibu es o he ad ancemen o
knowledge on he bene i s o ESG p ac ices on co po a e s ock
e u ns, p o iding ele an in o ma ion o assis u ili ies indus y p ac-
i ione s and in es o s in making decisions ha suppo he sus ain-
able alue c ea ion o he o ganisa ion, he en i onmen and he
s akeholde s.
The es o he a icle is s uc u ed as ollows. Sec ion 2p o ides
he heo e ical backg ound; Sec ion 3desc ibes he sample, da a and
me hodology used; Sec ion 4p esen s he esul s o he analysis;
Sec ion 5discusses he esul s ob ained; Sec ion 6ou lines he p ac i-
cal implica ions o he pape ; and inally, Sec ion 7concludes he
pape and ad ances u u e lines o esea ch.
2|THEORETICAL BACKGROUND AND
RESEARCH QUESTIONS
U ili ies indus y is he co ne s one o a na ion's in as uc u e as i
p o ides essen ial se ices o he socio-economic and sus ainable
de elopmen o coun ies, egions and ci ies (Giacomini e al., 2020;
Gila doni, 2020). The Indus y Classi ica ion Benchma k (ICB) includes
wi hin his indus y companies gene a ing and dis ibu ing elec ici y,
wa e and gas, as well as was e managemen and ecycling se ice
p o ide s. The elec ici y gene a ion and dis ibu ion sec o is consid-
e ed a majo con ibu o o he clima e change and he en i onmen al
s ess, placing i in he spo ligh o s akeholde s and egula o s
(Slacik & G eiling, 2020). Indeed, he ongoing clima e scena io equi es
hese companies o adap hei business models o changing policies
and sus ainable echnological inno a ions o enable he ansi ion o a
low-ca bon economy (Pe ei a e al., 2022). These ac ions mus also be
complemen ed wi h he e ela ion o speci ic sus ainabili y indica o s,
which in he case o elec ici y companies is a he limi ed, making i
di icul o assess hei p og ess on he esponsible beha iou s
(Slacik & G eiling, 2020). Gas dis ibu ion is o he essen ial se ice in
u ban ene gy sys ems. This ossil uel associa ed wi h high g een-
house gas emissions is widely used in indus ial and domes ic con-
sump ion, which also equi es huge e o s o ad ance owa ds
clima e neu ali y (Ve hagen e al., 2022). The popula ion g ow h and
concen a ion in u ban a eas gene a es ano he en i onmen al p ob-
lem ela ed o was e managemen . Was e gene a ion, as well as he
pollu ing p ocesses necessa y o was e managemen , u ns his sec-
o in o ano he enemy o global ecosys ems (Pais-Magalh˜aes
e al., 2021). Finally, wa e is mo e han a s a egic esou ce, i eplace-
able o he exis ence o li ing beings (Ago ino e al., 2021). I onically,
wa e is an inc easingly sca ce esou ce ha ep esen s a majo p ob-
lem o many communi ies (Za ei e al., 2020). Companies ocused on
2LÓPEZ-CABARCOS ET AL.
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he dis ibu ion and managemen o wa e mus keep in mind hei
public u ili y ole and wo k o ad ance in he social and en i onmen al
commi men o ensu ing he supply o his essen ial good (Cagno
e al., 2022).
Wi h sus ainabili y as one o he bigges challenges acing he
mode n business wo ld, u ili ies mus pay a en ion o ESG c i e ia
and hei impac on business pe o mance. I has been shown ha
‘high sus ainabili y companies’, ha is, hose ha ha e olun a ily
adop ed sus ainabili y policies many yea s ago, achie e signi ican ly
be e pe o mance in he long un han adi ional companies. This
ou pe o mance is s onge in sec o s whe e i ms ely hea ily on he
ex ac ion o la ge amoun s o na u al esou ces (Eccles e al., 2011),
such as u ili ies. P e ious esea ch has also concluded ha companies'
en i onmen al communica ion can be ewa ded wi h be e pe o -
mance in inancial ma ke s (Amo es-Sal ad
o e al., 2022). Al hough
he e a e se e al s udies ocused on he impac o a company's ESG
policy on i s economic and inancial pe o mance (Abdelmo aal &
Abdel-Kade , 2016; Hussain e al., 2018), he e is ha dly any s udy
ocused on he u ili ies indus y conside ing he s ock e u ns as a
measu e o ma ke -based inancial pe o mance. So, i is necessa y o
del e in o he sus ainabili y-s ock e u ns ela ionship. In ac , he
impac o ESG ac o s on he long- e m p o i abili y o companies is
leading o conside ‘sus ainable in es men s’as ‘common in es -
men s’(Eccles e al., 2020). Consequen ly, co po a e ESG conside -
a ions ha e become a well-es ablished c i e ion o e alua ing
co po a e pe o mance and s a egy among in es o s (Mo ow
Sodali, 2021). Following p e ious s udies' in e es in decons uc ing
he ESG pilla s o acili a e a de ailed assessmen o co po a e sus ain-
able pe o mance (Ehle s e al., 2022; Hussain e al., 2018), his s udy
ocuses on he analysis o i e ESG indica o s ele an o he u ili ies
indus y, which indi idually and collec i ely can a ec companies'
pe o mance.
2.1 |CO
2
equi alen emissions
In he ansi ion o a sus ainable and cleane plane , he deca bonisa-
ion o businesses and economies a ound he wo ld is an una oidable
equi emen . A he Eu opean le el, legisla ion and egula ion on cli-
ma e issues and co po a e non- inancial epo ing is inc easingly
g owing (A idsson & Dumay, 2022). The spo ligh is now on highly
pollu ing indus ies. The economic ac i i ies ha gene a ed he high-
es onnes o CO
2
equi alen emissions in 2020 in he Eu opean
Union (EU) include elec ici y, gas, s eam and ai condi ioning supply,
as well as wa e supply, cons uc ion and o he se ice ac i i ies
(Eu os a , 2022). These da a highligh he impo ance and impac o
GHG emissions om u ili ies. Al hough ecen yea s show a decline in
he GHG emissions in ensi y o he EU powe gene a o s, he elec ic-
i y sec o con inues o ind di icul ies o achie e he clima e a ge s,
equi ing d as ic educ ions ela ed o emissions and en i onmen al
impac s (Slacik & G eiling, 2020).
F om an in es o pe spec i e, ca bon oo p in ep esen s
a measu e o a company's exposu e o clima e ansi ion isk
(Nguyen e al., 2021). This isk can di ec ly impac on in es o s' po olio
companies h oughou hei in es men decisions (K uege e al., 2020).
P e ious li e a u e p o ides mixed esul s ega ding he ela ionship
be ween i ms' en i onmen al pe o mance (GHG emissions) and
s ock ma ke pe o mance. Hsu e al. (2023) ind ha highly pollu ing
i ms ha e g ea e exposu e o en i onmen al egula o y isks and
hus highe a e age e u ns. Bol on and Kacpe czyk (2021) epo ha
s ocks o US companies wi h he highes CO
2
emissions ea n he
highes e u ns. This ca bon p emium is ela ed o he o al le el o
emissions and o he annual change in company emissions. In he
same ein, Busch e al. (2022) obse e an associa ion be ween lowe
ca bon emissions and lowe ma ke -based inancial pe o mance, sug-
ges ing ha in es o s do no pe cei e a company's enhanced ca bon
pe o mance as a alue d i e . Con e sely, o he au ho s es ablish an
in e se CO
2
equi alen emissions-s ock ma ke pe o mance ela ion-
ship. In his sense, Guas ella e al. (2022) a gue ha he u ili ies indus-
y's high GHG emissions ha e a nega i e impac on i s inancial
pe o mance. G i in e al. (2017) conclude ha GHG emissions in o -
ma ion olun a ily disclosed h ough he Ca bon Disclosu e P ojec by
companies in emissions-in ensi e sec o s nega i ely a ec s in es o s'
assessmen o i ms' alue. Simila ly, Ma sumu a e al. (2014) ind ha
highe le els o di ec ca bon emissions a e linked o lowe alues o
S&P 500 companies. Likewise, Choi and Luo (2021) claim ha compa-
nies a e penalised in he s ock ma ke acco ding o hei le el o GHG
emissions. Aljughaiman e al. (2021) ind ha he mos pollu ing
FTSE350-lis ed UK companies ha e a highe p obabili y o ex emely
nega i e s ock e u ns, making hem mo e uns able and iskie . The
me a-analysis by Busch and Lewandowski (2018) suppo s he no ion
o a posi i e ela ionship be ween good co po a e ca bon pe o -
mance (low amoun s o ca bon emissions) and supe io inancial pe -
o mance (mainly ma ke -based measu es). The e a e s ill no
conclusi e esul s on he ela ionship be ween GHG emissions and
co po a e s ock e u ns, so he ollowing p oposi ion is es ed:
P1. The absence o CO
2
equi alen emissions in u ili y
companies leads o he p esence o s ock e u ns.
2.2 |Sus ainabili y compensa ion incen i es
F om he i s co po a e social e o s o oday's ESG-based ini ia i es,
sus ainabili y has gaining ac ion on he agenda o co po a e boa ds,
p og essing owa ds i s in eg a ion in o companies' s a egic planning.
Consequen ly, senio execu i e compensa ion equi es changes o
conside inancial and non- inancial me ics o be e assess longe -
e m pe o mance (Eccles e al., 2020). T adi ionally, execu i e com-
pensa ion has been conside ed a use ul ool o educing agency
con lic s (Jenson & Meckling, 1976), app oach ha coexis s wi h he
s akeholde heo y (F eeman, 2010) and he s eam o esea ch
ocused on esol ing he con lic s be ween manage s and s ake-
holde s h ough a sus ainable pe o mance amewo k (Ng &
Na hwani, 2012). This has encou aged companies o pu sue social
objec i es h ough ini ia i es as linking execu i e pay o sus ainabili y
LÓPEZ-CABARCOS ET AL.3
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a ge s (Abdelmo aal & Abdel-Kade , 2016). P io esea ch has con-
cluded a posi i e and di ec ela ionship be ween se ing ESG a ge s
in senio compensa ion plans and he sus ainable pe o mance o
companies (Ba aiba -Diez e al., 2019; Eccles e al., 2011; Minciullo
e al., 2022). This s ance is backed by ins i u ional in es o s, who sup-
po he inclusion o ESG pe o mance me ics in sho - and long-
e m compensa ion plans (Mo ow Sodali, 2021). Fo his eason,
he companies' choice be ween di e en me ics u ns ou o be a
e y impo an issue o hei business pe o mance (Singe , 2012).
Howe e , some au ho s wa n ha manage s may exe cise con ol
o e ESG pe o mance measu es, so linking hei emune a ion o
hese me ics may no be synonymous wi h engaging in such ac i i-
ies (Qin & Yang, 2022). Mo eo e , execu i e emune a ion may be
boos ed wi hou e ec i ely add essing execu i es' eal mo i a ions
(Bebchuk & Talla i a, 2022).
Few p io s udies ha e analysed he implica ions o i m pe o -
mance o including non- inancial measu es in he design o execu i e
compensa ion plans. Said e al. (2003) a gue ha he combined use o
inancial and non- inancial pe o mance measu es leads o highe
s ock ma ke e u ns, imp o ing i ms' cu en and u u e pe o mance
in inancial ma ke s. Gan e al. (2020) ind ha he exis ing ma ginal
ela ionship be ween CEO equi y-based compensa ion and highe
u u e i m alue becomes s onge when non- inancial pe o mance
measu es a e in eg a ed in o bonus con ac s. Fo Bachmann e al.
(2020) he inclusion o quan i iable non- inancial a ge s o pe o -
mance a ge s linked o CSR in CEO bonus con ac s is posi i ely
ela ed o subsequen i m pe o mance. Las ly, Abdelmo aal and
Abdel-Kade (2016) show ha he adop ion o sus ainable incen i es
leads o highe e u ns on sha eholde unds bu no on o al sha e-
holde e u ns. Despi e his, he posi i e associa ion be ween sus ain-
able incen i es and o al sha eholde e u ns indica es ha hese
incen i es can mee s akeholde s' in e es s wi hou nega i ely
in luencing sha eholde s' needs. Since mo e esea ch is needed
a ound his issue, he ollowing p oposi ion is es ed:
P2. The p esence o senio execu i es' incen i es linked o
sus ainabili y a ge s in u ili y companies leads o he p es-
ence o s ock e u ns.
2.3 |En i onmen al in es men
Clima e change isks ex end o business o ganisa ions, aising eco-
nomic, en i onmen al and social challenges and oppo uni ies. The
lack o s a e and egula o y suppo , he exis ence o s akeholde o
ma ke p essu es, he o ganisa ional speci ici ies, o he inc emen al
cos s a e some o he challenges ha companies mus ace, while new
oppo uni ies ela ed o en i onmen al, ope a ional and inancial
imp o emen s as well as new business ini ia i es a e eme ging (Lee
e al., 2015; Seles e al., 2018). Acco dingly, companies a e designing
s a egies o adap o and/o mi iga e he consequences o clima e
change (Seles e al., 2018) ha can a ec hei business pe o mance
and public image (Pue as e al., 2022). En i onmen al expendi u e
and in es men s ocus on p ojec s and ac i i ies wi h a posi i e
impac on he en i onmen , anging om en i onmen al p o ec ion
(p e en ion, educ ion and con ol o haza ds and o he en i on-
men al impac s such as was e and emissions managemen ), o inno-
a ion h ough esea ch and de elopmen (R&D) o g een p oduc s
o se ices (G assmann, 2021). The speci ic cha ac e is ics o he
u ili ies indus y, such as i s exposu e o social and go e nmen al
p essu es, i s igid egula o y amewo k o he la ge numbe o
asse s and in as uc u e equi ed, can condi ion he esponses o
hese o ganisa ions o he clima e c isis. Among he possible busi-
ness eac ions, he li e a u e emphasises he design and de elop-
men o e ec i e policies ha moni o and disclose he cos s and
bene i s associa ed wi h mi iga ing he po en ial nega i e conse-
quences o clima e change (Lee e al., 2015), he coope a ion wi h
o he o ganisa ions o p o ide be e en i onmen al managemen
solu ions (Bicknell & McManus, 2006), he olun a y adop ion o
p ac ices ha p omo e low GHG p oduc ion, and he alloca ion o
o ganisa ional economic esou ces o R&D (Seles e al., 2018).
F om a p oac i e pe spec i e, en i onmen al in es men and
inno a ion ha e become a sou ce o solu ions o success ul en i on-
men al managemen and he gene a ion and exploi a ion o new
oppo uni ies. In his way, A i a e al. (2020) show ha he in es -
men s in inno a i e echnologies help mi iga e and educe he p ob-
lems caused by clima e change. Fo Ali e al. (2021), R&D in es men
in clean and enewable ene gy echnologies can con ibu e o inc ease
economic g ow h and enhance en i onmen al condi ions. Mo eo e ,
Shahbaz e al. (2020) a gue ha while ene gy consump ion and inan-
cial de elopmen con ibu e o en i onmen al de e io a ion, R&D
in es men s help e e se his si ua ion.
In es o s seeking o maximise hei e u ns should ake in o
accoun en i onmen al cos s and assess he e iciency o he R&D
in es men s o he a ge company, since hey can ha e a high posi-
i e impac on ma ke capi aliza ion (Pue as e al., 2022). Acco ding
o Hoang e al. (2020) companies' in ol emen in sus ainable inno a-
ion along wi h an inc easing en i onmen al disclosu e posi i ely in lu-
ence ma ke pe o mance. In sec o s such as ene gy, R&D s imula es
en i onmen al p ac ices ela ed o he educ ion o emissions, he
educ ion o esou ces consump ion and eco-inno a ion, which a e
a ou ably pe cei ed by sha eholde s (Uya e al., 2022). Speci ically,
he disclosu e o en i onmen al capi al expendi u e in he elec ici y
u ili y sec o is s ongly co ela ed wi h lowe emission a es and
supe io inancial pe o mance (Sil a-Gao, 2012). Fo Lee e al. (2015)
he ma ke eac s posi i ely o in es men s in en i onmen al R&D
since hey ep esen a c edible co po a e en i onmen al commi men .
Howe e , acco ding o G assmann (2021), en i onmen al expendi-
u es ollow a U-shaped ela ionship wi h i m alue. The e o e, com-
panies mus exceed a ce ain h eshold in e ms o expendi u es on
en i onmen al p o ec ion and en i onmen al R&D o achie e a posi-
i e e ec on hei alua ion. Con e sely, some au ho s poin ou ha
achie ing high en i onmen al pe o mance equi es la ge en i onmen-
al in es men s ha can lead o assume huge cos s no su icien ly
ewa ded, and consequen ly lowe inancial pe o mance (Bénabou &
Ti ole, 2010). Al hough mos o he p e ious li e a u e a gues ha
4LÓPEZ-CABARCOS ET AL.
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en i onmen al expendi u e and in es men s b ing bene i s o business
pe o mance, especially wi h ega d o R&D, mo e esea ch is needed.
The e o e, he ollowing p oposi ion is es ed:
P3. The p esence o en i onmen al in es men s in u ili y
companies leads o he p esence o s ock e u ns.
2.4 |En i onmen managemen aining
Companies a e inc easingly engaging in g een human esou ce man-
agemen (GHRM) in ol ing employees in he company's g een ini ia-
i es (Ren e al., 2018). GHRM con ibu es no only o he ansi ion
owa ds he ci cula economy bu also o imp o e o ganisa ional pe -
o mance (Ma ucci e al., 2021; Ma ucci, Daddi, & I aldo, 2022b).
GHRM can be unde s ood as a se o human esou ce managemen
(HRM) p ac ices ha aim o p omo e esponsible and en i onmen ally
iendly use o esou ces o os e employees' en i onmen al awa e-
ness and engagemen (Tang e al., 2018). HRM can play a double ole
wha conce ns o en i onmen and sus ainabili y; ha is, he medium
ha can in luence changes induced by he en i onmen (Jabbou &
Jabbou , 2016) o he end o encou age bo h a i udinal and beha-
iou al changes among employees o con ibu e o he o ganisa ion's
en i onmen al pe o mance (Ren e al., 2018). GHRM can be applied
o i e unc ions o HRM; namely, ec ui men and selec ion, aining,
pe o mance managemen , pay and ewa d sys ems, and in ol emen
(Tang e al., 2018). En i onmen al aining o employees is conside ed
he main HRM p ac ice ela ed o en i onmen al managemen and is a
ype o in es men o be suppo ed o e ime (Jabbou , 2011). Speci -
ically, g een aining encompasses a se o ac i i ies ha aim o mo i-
a e s a o acqui e skills and commi o en i onmen al ca e,
including employees' awa eness, knowledge managemen , and c ea-
ion o a g een o ganisa ional clima e (Tang e al., 2018).
P io esea ch has add essed he ela ionship be ween employees
aining and o ganisa ional pe o mance. Kwon (2019) inds ha
in es men g ow h in aining and de elopmen is posi i ely ela ed o
he i m's u u e inancial pe o mance. Ga a an e al. (2021) es ablish
a di ec ela ionship be ween aining in bo h quan i a i e and quali a-
i e e ms and i m pe o mance. Mo e ecen ly, Yoo e al. (2022)
s a e ha aining and de elopmen in es men s lead o a subsequen
inc ease in inancial pe o mance and, in u n, highe le els o inancial
pe o mance also con ibu e o highe in es men in aining and
de elopmen . G een aining has also p o en o ha e a posi i e impac
on sus ainable o ganisa ional pe o mance, de eloping en i onmen al
knowledge and gene a ing awa eness and commi men among
employees (Ma ucci, Iannone, e al., 2022; Yong e al., 2020). In he
u ili ies indus y, g een aining can be ele an a bo h co po a e and
socie al le els, due o he la ge en i onmen al impac esul ing om
i s ac i i y and i s huge in ol emen in he daily li e o ci izens. P es-
su es om s akeholde s on i m's sus ainabili y a e posi i ely ela ed
o o ganisa ional pe o mance and he adop ion o GHRM p ac ices
(Ma ucci, Daddi, & I aldo, 2022c). Renwick e al. (2013) no e ha
hese g een p ac ices do no only con ibu e o imp o e employees'
well-being and en i onmen al pe o mance, bu also boos he o gani-
sa ion's inancial pe o mance. Acco ding o Po e and K ame
(2011), mee ing s akeholde demands such as g een aining o
employees, leads o sha eholde s alue c ea ion. The esea ch on
g een aining and i s impac on business pe o mance is s ill a a
s a ing poin , so u he s udy on his ield is needed. The e o e, he
ollowing p oposi ion is es ed:
P4. The p esence o en i onmen al managemen aining
in u ili y companies leads o he p esence o s ock e u ns.
2.5 |Policy ai compe i ion
F om a managemen poin o iew, co po a e communica ion is an
indispensable s a egy o se and implemen he main o ganisa ional
policies (Chen & Tao, 2020). The ‘code o conduc ’is a ool used by
companies o communica e hei policies, de ailing desi able co po a e
beha iou s and desc ibing aspec s o bo h business and pe sonal
e hics (Ruban & Yashalo a, 2021). The e o e, his documen can be
unde s ood as a oadmap o add essing some aspec s ela ed o he
social pilla o ESG p ac ices in o ganisa ions. I p o ides us and eli-
abili y o s akeholde s, complemen ing and enhancing exis ing legal
egula ions (L
opez Jiménez e al., 2021). The quali y o he code o
conduc will a ec he company's CSR pe o mance, which in u n will
a ec he e ec i eness o he code and i s abili y o b ing abou
ans o ma ions in he o ganisa ional cul u e (E win, 2011). As a eli-
able social indica o embodied in he co po a e codes o conduc , ai
compe i ion policies exp ess he desi ed beha iou o companies wi h
espec o hei compe i o s, add essing issues such as espec o pa -
en s and in ellec ual p ope y, an i us ac ics, manipula ion and p ice
inc eases, o an i-compe i i e beha iou s. Fai compe i ion policies lay
he ounda ion o an imp o ed business en i onmen and con ibu e
o economic and en i onmen al pe o mance (Qi e al., 2022). The e-
o e, in u ili ies indus y i is essen ial o os e a ai compe i i e en i-
onmen conduci e o a well- unc ioning ma ke , since any une hical
and un ai compe i i e beha iou , such as p ice- ixing collusion o
abuse o dominance, can ha e a s ong and nega i e social, economic,
and en i onmen al impac (Duso e al., 2020; Razmi e al., 2020).
Al hough an i-compe i i e p ac ices a e conside ed s a egies
wi h po en ial nega i e impac s on i ms' pe o mance and ma ke
alue, some p e ious esea ch shows mixed esul s (Le Roy
e al., 2017). Thus, some au ho s ha e ound ha con ic ions o an i-
compe i i e p ac ices ha e a nega i e e ec on co po a e ma ke
alue (Bi lingmaye & Hazle , 2000; De Vany & McMillan, 2004). Le
Roy e al. (2017) show ha h ee con ingency ac o s ( he amoun o
he ine, he deg ee o in ol emen o he company and he size o
he company) can de e mine he g ea e o lesse impac o sanc ions
o an i-compe i i e beha iou s on he belie s o in es o s and, conse-
quen ly, on he company's s ock e u ns. Howe e , o he au ho s
ha e no ound ha an i-compe i i e beha iou s sanc ions ha e a sig-
ni ican impac on he companies' s ock alue (Thompson &
Kase man, 2001). As he knowledge a ound he in luence o ai
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compe i ion policies on i ms' inancial pe o mance is limi ed, he ol-
lowing p oposi ion is es ed:
P5. The p esence o ai compe i ion policies in u ili y
companies leads o he p esence o s ock e u ns.
Conside ing he open discussion ela ed o he abo e-commen ed
i e ele an ESG indica o s a ec ing u ili y companies, and o es
whe he he e a e di e ences in he ESG d i e s o s ock ma ke
e u ns be ween elec ici y and o he u ili y companies, he ollowing
p oposi ion is es ed:
P6. The causal con igu a ions leading o he p esence o
s ock e u ns among u ili y companies a e di e en
be ween elec ici y and non-elec ici y sec o s.
3|METHODOLOGY
3.1 |Fuzzy-se quali a i e compa a i e analysis
A sQCA app oach was adop ed o iden i y he ESG ac o s ha may
in luence he s ock ma ke e u ns o u ili y companies. FsQCA is a
me hodology based on se heo y and Boolean algeb a, use ul o
de e mining which combina ions o a se o an eceden condi ions
( ac o s conside ed he cause o a phenomena) a e likely o lead o a
speci ic esul ( he phenomena unde s udy) (Legewie, 2013;
Longes & Vaisey, 2008). The e o e, i assumes he coexis ence o di -
e en causal pa hways ha may be ele an o lead o a desi ed ou -
come. FsQCA explains causali y in e ms o necessi y and su iciency.
A condi ion is conside ed necessa y o an ou come i he ou come
canno be achie ed in he absence o ha condi ion. In u n, a condi-
ion o combina ion o condi ions (con igu a ion) is conside ed su i-
cien o an ou come i he ou come occu s whene e he condi ion is
p esen , al hough he esul may also occu in he p esence o o he
condi ions (Ragin, 2008). The 3.0 sQCA so wa e e sion was used o
conduc he analysis.
3.2 |Sample and da a
The STOXX Eu ope To al Ma ke U ili ies Index was chosen o iden-
i y he 65 companies ha make up he ini ial s udy sample. This is a
egional index esul ing om a clus e ing o coun y indices ep esen-
a i e o he u ili ies indus y based on he ICB, which ca ego ise com-
panies depending on hei main sou ce o e enues. The u ili ies
indus y comp ises all companies gene a ing and/o dis ibu ing elec-
ici y, wa e , gas, as well as companies p o iding was e, ecycling,
and o he en i onmen al se ices. A e emo ing hose companies
ha lacked he necessa y in o ma ion o he analysis ( his da a is dis-
closed on a olun a y basis), he inal sample comp ises 47 companies
wi h headqua e s in Eu ope. These include 27 om he elec ici y
sec o , 16 om he gas, wa e and mul i-u ili ies sec o , and 4 om
he was e and disposal se ices sec o . The headqua e s o hese
companies a e mainly loca ed in I aly (10), UK (8), Spain (6), F ance
(5) and Ge many (4). On a e age, he o al asse s epo ed by hese
companies amoun o 33,689 million eu os, wi h o al e enues o
a ound 12,662 million eu os, a wo k o ce o 22,774 employees, and
an age o 38 yea s.
The main sample was spli o conduc an in-dep h analysis o
compa e possible disc epancies be ween companies in he elec ici y
sec o and o he non-elec ici y u ili ies. This double app oxima ion
p o ides an in e es ing app oach, since he deca bonisa ion, digi alisa-
ion and decen alisa ion o he Eu opean elec ici y sec o is de ining
he ene gy ansi ion s a egy in he con inen (Ribei o e al., 2023).
Fu he mo e, as elec ici y is expec ed o be he main ene gy d i e
o sus ainable de elopmen (S a ace, 2020), he decisions and in es -
men s made by elec ici y companies will ha e a signi ican impac in
social, economic, and en i onmen al e ms o Eu opean socie ies.
The closing p ice o he s ocks, as well as he company-le el ESG
da a we e ga he ed om he Thomson Reu e s EIKON da abase. The
s udy pe iod e e s o 2020 conside ing also he iscal yea o he
companies analysed.
3.3 |Ou come, condi ions and calib a ion
S ock e u ns is a widely used measu e o co po a e inancial pe o -
mance (Bol on & Kacpe czyk, 2021; Feng e al., 2022) capable o cap-
u ing he impac o manage s' ac ions on he i m alue (Cadman
e al., 2010). Hence, he annual s ock ma ke e u n o he u ili y com-
panies was selec ed as he ou come. To calcula e i , he closing p ices
in eu os o each company's las s ock p ices o 2019 and 2020 we e
compiled. In hose cases whe e he same company was lis ed in mo e
han one ma ke , he coun y whe e i s headqua e s we e loca ed
was aken as he e e ence ma ke . The annual company e u ns we e
calcula ed ollowing Campbell e al. (1997, p. 11):
Ri ¼ln Pi
ðÞln Pi 1
ðÞ ð1Þ
whe e Pi
is he close p ice o he s ock i(conside ing he 47 compa-
nies) a ime (2020). In addi ion, i e an eceden condi ions ela ed
o he h ee ESG pilla s we e selec ed: o al CO
2
equi alen emissions,
sus ainabili y compensa ion incen i es, en i onmen al in es men s,
en i onmen managemen aining, and policy ai compe i ion
(Table 1).
The aw da a ob ained o he ou come and he an eceden con-
di ions we e calib a ed o deno e he deg ee o membe ship o each
case o each o he se s (Schmi e al., 2017). While he dicho omous
a iables (INCEN, EXP, TRAIN and FAIR) we e ans o med in o c isp
se s, he con inuous a iables (RET and CO
2
) we e ans o med in o
uzzy se s. Commonly accep ed h esholds in he li e a u e o his
kind o da a we e adop ed in his s udy (L
opez-Caba cos e al., 2021;
Olaya-Escoba e al., 2020) se ing he b eakpoin s a he 90 h, 50 h
and 10 h pe cen iles ( ull membe ship, c oss-o e poin and ull non-
membe ship).
6LÓPEZ-CABARCOS ET AL.
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4|RESULTS
Th ee models we e analysed: he i s includes he 47 companies
belonging o he u ili ies indus y (M_u ili ies); he second includes
hose 27 companies belonging o he elec ici y sec o (M_elec );
inally, he hi d model (M_noelec ) includes hose 20 companies
belonging o sec o s o he han elec ici y (gas, wa e and mul i-u ili-
ies, o was e and disposal se ices).
Table 2p esen s he esul s o he analysis o he necessa y con-
di ions. The esul s show ha he e a e no necessa y condi ions, since
in he h ee p oposed models none o he condi ions showed a consis-
ency sco e exceeding he h eshold alue o 0.9. Howe e , in
M_elec and M_noelec , en i onmen managemen aining and policy
ai compe i ion we e iden i ied as quasi-necessa y condi ions, espec-
i ely (consis ency alues close o 0.9) (Schneide e al., 2010).
The su iciency analysis was also pe o med. The ollowing
models we e es ed:
M_u ili ies :RET u ili ies indus yðÞ
¼ CO2,INCEN,INV,TRAIN,FAIRðÞ
M_elec :RET elec ici y sec o ðÞ
¼ CO2,INCEN,INV,TRAIN,FAIR
ðÞ
M_noelec :RET nonelec ici y sec o sðÞ
¼ CO2,INCEN,INV,TRAIN,FAIRðÞ
Table 3 epo s he in e media e solu ions, including pe iphe al
and co e condi ions. Pe iphe al condi ions (small ci cles) indica e a weake
causal ela ionship o he condi ions wi h he ou come, while co e condi-
ions (la ge ci cles) indica e a s onge ela ionship (Fiss, 2011). In M_u ili-
ies, con igu a ion 1 [CO
2
*INCEN*INV*TRAIN] shows ha he
combina ion o he absence o CO
2
equi alen emissions, he
absence o sus ainabili y compensa ion incen i es, and he p esence
o en i onmen al in es men s and en i onmen managemen ain-
ing leads o he p esence o u ili y companies' s ock e u ns. Con ig-
u a ion 2 [CO
2
*INCEN*INV*FAIR] shows ha he combina ion
o he absence o CO
2
equi alen emissions, he absence o sus-
ainabili y compensa ion incen i es, he p esence o en i onmen-
al in es men s and he p esence o a ai compe i ion policy leads
o he ou come. In bo h pa e ns, CO
2
,INCEN and INV a e
shown as co e condi ions. Consequen ly, p oposi ions P1 and P3
a e suppo ed. P oposi ion P2 is no suppo ed as i is he absence
and no he p esence o execu i e incen i es ha leads o he
p esence o s ock e u ns. P oposi ions P4 and P5 a e pa ially
suppo ed since en i onmen al aining and ai compe i ion policy
a e p esen in only one o he wo causal con igu a ions.
In M_elec , he i s con igu a ion [CO
2
*INCEN*TRAIN* FAIR]
shows ha he combina ion o he absence o CO
2
equi alen emis-
sions, he p esence o sus ainabili y compensa ion incen i es and he
p esence o en i onmen managemen aining leads o he p esence
o elec ici y companies' s ock e u ns, e en i policy ai compe i ion
is absen . The second con igu a ion [CO
2
*INV*TRAIN* FAIR]
shows ha he combina ion o he absence o CO
2
equi alen emis-
sions, he p esence o en i onmen al in es men s and he p esence o
en i onmen managemen aining leads o he p esence o elec ici y
companies' s ock e u ns, once again e en i policy ai compe i ion is
absen . The hi d con igu a ion [CO
2
*INCEN*INV* TRAIN*FAIR]
shows ha he absence o sus ainabili y compensa ion incen i es, he
p esence o en i onmen al in es men s and he p esence o a policy
ai compe i ion lead o he ou come, e en i o al CO
2
equi alen
emissions a e p esen and en i onmen managemen aining is
absen .
Finally, in M_noelec , he i s con igu a ion [CO
2
*INCE-
N*INV*FAIR] shows ha he combina ion o he absence o CO
2
equi alen emissions, he absence o sus ainabili y compensa ion
incen i es, he p esence o en i onmen al in es men s and he p es-
ence o policy ai compe i ion leads o he p esence o non-elec ici y
companies' s ock e u ns. The second [CO
2
*INCEN* INV* 
TRAIN*FAIR] shows ha he combina ion o he absence o o al CO
2
equi alen emissions, he p esence o sus ainabili y compensa ion
TABLE 1 Ou come and condi ions.
Type Label Desc ip ion ESG pilla
Ou come RET Annual company s ock ma ke e u n in he coun y o headqua e s. -
Condi ion CO
2
To al ca bon dioxide (CO
2
) emissions and CO
2
equi alen s measu ed in
onnes.
To al CO
2
emissions include scope 1 +scope 2.
En i onmen al
Condi ion INCEN Whe he o no senio execu i e compensa ion is linked o CSR, heal h
and sa e y o sus ainabili y a ge s.
Go e nance
Condi ion INV Whe he o no he company epo s on i s en i onmen al expendi u es
o epo s ha i makes p oac i e en i onmen al in es men s o educe
u u e isks o inc ease u u e oppo uni ies.
En i onmen al
Condi ion TRAIN Whe he o no he company ains i s employees on en i onmen al
issues.
Social/En i onmen al
Condi ion FAIR Whe he o no he company desc ibes in i s code o conduc i s e o s
o be a ai compe i o . This includes espec ing o he companies'
pa en s, copy igh s o in ellec ual p ope y, o a oiding an i-
compe i i e beha iou , p ice ixing o o he monopolis ic ac ics.
Social
No e: Desc ip ions adap ed om Thomson Reu e s EIKON da abase.
LÓPEZ-CABARCOS ET AL.7
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incen i es and he p esence o a policy ai compe i ion leads o he
p esence o he ou come, e en i en i onmen al in es men s and en i-
onmen managemen aining a e absen . So, he esul s ob ained in
M_elec and M_noelec suppo p oposi ion P6.
5|DISCUSSION
Th ough an sQCA analysis his s udy highligh s he impo ance o
some ESG aspec s owa ds he goal o achie ing sus ainable business
models and success ul inancial ma ke pe o mance. Consis en wi h
he esul s ob ained in M_u ili ies, comba ing GHG emissions has
been and con inues o be a majo conce n in he igh agains clima e
change in he EU. In ac , he subsample o non-elec ici y companies
shows a s ong commi men o low emissions, wi h he CO
2
condi ion
absen in he wo possible con igu a ions. This is also p edominan
among elec ici y companies, wi h CO
2
as a co e condi ion absen in
wo and p esen in one o he h ee pa hs leading o he p esence o
s ock e u ns. This s ong clima e conce n has been e lec ed in in es-
o s' decisions, making deca bonisa ion one o hei ESG p io i ies.
These indings a e in line wi h p e ious s udies ha poin o a penali-
sa ion in s ock ma ke s o highe le els o GHG emissions (Choi &
Luo, 2021; G i in e al., 2017). This nega i e ela ionship is mo e p o-
nounced in emissions-in ensi e indus ies such as u ili ies. Conse-
quen ly, his commi men o ca bon and equi alen emissions
neu ali y allows companies o achie e inancial imp o emen s by
managing an unwan ed ou pu in he business alue gene a ion p o-
cess (Nguyen e al., 2021). No less impo an is he ole o en i on-
men al in es men s. The esul s show ha INV condi ion is p esen as
co e in he wo causal con igu a ions o M_u ili ies. In M_elec , INV is
p esen as a co e condi ion in wo o he h ee possible con igu a-
ions, and in M_noelec in one o he con igu a ions, while i is absen
as a pe iphe al condi ion in he o he one. Clima e change and he
eme gence o ex eme wea he phenomena a e o cing u ili ies o
TABLE 3 Analysis o su icien
condi ions (Ou come: S ock e u ns).
M_u ili ies M_elec M_noelec
1234567
CO
2
INCEN
INV
TRAIN
FAIR
Consis ency (incl.) 0.8526 0.8798 0.8075 0.8687 0.8034 0.9105 0.9011
Raw co e age (co . ) 0.2437 0.2561 0.1171 0.1746 0.0729 0.3081 0.0886
Unique co e age (co .u) 0.0604 0.0728 0.0590 0.1164 0.0729 0.3081 0.0886
Solu ion co e age 0.3165 0.3064 0.3968
Solu ion consis ency 0.8825 0.8386 0.9084
No e:‘’Deno es he p esence o he condi ion while ‘ ’ deno es he absence o he condi ion. Small
ci cles deno e pe iphe al condi ions while la ge ci cles deno e co e condi ions (Fiss, 2011). Consis ency
cu o , M_u ili ies: 0.8397; M_elec : 0.8000; M_noelec : 0.8692. F equency cu o : 1. Vec o o expec ed
di ec ions (0, 1, 1, 1, 1) (Ragin & Da ey, 2016).
TABLE 2 Analysis o necessa y
condi ions (Ou come: S ock e u ns).
M_u ili ies M_elec M_noelec
Condi ions Consis ency Co e age Consis ency Co e age Consis ency Co e age
CO
2
0.484692 0.602570 0.511249 0.551926 0.476757 0.523753
CO
2
0.728429 0.684348 0.740109 0.633466 0.747027 0.596718
INCEN 0.403976 0.461818 0.424360 0.497273 0.365405 0.307273
INCEN 0.596024 0.599600 0.575640 0.463750 0.634595 0.652222
INV 0.763817 0.548857 0.787432 0.507500 0.724324 0.446667
INV 0.236183 0.495000 0.212568 0.391429 0.275676 0.510000
TRAIN 0.792048 0.510769 0.882079 0.473750 0.615135 0.379333
TRAIN 0.207952 0.653750 0.117921 0.506667 0.384865 0.712000
FAIR 0.755865 0.543143 0.666408 0.452105 0.890811 0.515000
FAIR 0.244135 0.511667 0.333592 0.537500 0.109189 0.252500
No e: ep esen s absence o he condi ion. Bold ep esen s quasi-necessa y condi ions.
8LÓPEZ-CABARCOS ET AL.
15353966, 0, Downloaded om h ps://onlinelib a y.wiley.com/doi/10.1002/cs .2483 by Uni e sidade de San iago de Compos ela, Wiley Online Lib a y on [15/06/2023]. See he Te ms and Condi ions (h ps://onlinelib a y.wiley.com/ e ms-and-condi ions) on Wiley Online Lib a y o ules o use; OA a icles a e go e ned by he applicable C ea i e Commons License
make p oac i e en i onmen al in es men s ha allow hem o mi i-
ga e cu en and u u e isks o e en ake ad an age o po en ial
u u e oppo uni ies. The high exposu e o his indus y o mul iple
isks, such as hose a ising om he sca ci y o na u al esou ces like
wa e —an essen ial commodi y o he p oduc ion p ocess and p ope
unc ioning o hese companies as well as o he human
consump ion— equi es an u gen esponse o ensu e he p o ec ion
and p ese a ion o he na u al en i onmen and he su ounding
con ex in which hese companies ope a e. To his end, u ili ies
should implemen en i onmen al managemen sys ems ha allo-
ca e adequa e inancial esou ces o ac i i ies and p ojec s aimed
o cause posi i e en i onmen al impac s. This includes spending
and in es ing in sys ems and equipmen o ea GHG emissions,
was e, soil and wa e pollu ion, bu also in es ing in en i onmen al
p e en ion and en i onmen al R&D and inno a ion (Seles
e al., 2018), since, acco ding o s udy esul s, bo h s a egies lead
o imp o e s ock e u ns. Indeed, in es men in R&D encou ages
he eme gence o en i onmen al p ac ices h ough which he o ga-
nisa ion's en i onmen al commi men is demons a ed o sha e-
holde s (Uya e al., 2022).The esul sob aineda einlinewi h
p e ious esea ch ha posi i ely ela es in es men s in en i on-
men al p o ec ion and en i onmen al R&D o ma ke pe o mance
and business alua ion (G assmann, 2021;Hoange al.,2020;
Pue as e al., 2022). The absence o his condi ion in one o he
con igu a ions o M_noelec can be aligned wi h he indings o
Bénabou and Ti ole (2010), who conside ha high en i onmen al
in es men e o s o an o ganisa ion can ep esen a high cos o
he company which, i no su icien ly ewa ded, can lead o wo sen
i s inancial pe o mance.
Acco ding o M_u ili ies esul s, he absence o sus ainabili y
compensa ion incen i es o senio execu i es is also an impo an
a iable o he p esence o s ock e u ns, al hough his seems o be
less clea in he subsample models. Fo elec ici y u ili ies, compensa-
ion incen i es a e p esen as a co e condi ion in one o he h ee
con igu a ions and absen as a pe iphe al condi ion in o he one. Fo
non-elec ici y u ili ies, compensa ion incen i es a e p esen as a co e
condi ion in one pa h and absen in he o he . These mixed esul s
show ha only o some companies and in es o s, linking sus ain-
able pe o mance a ge s o execu i e incen i es can be posi i e o
i m pe o mance. These esul s pa ially suppo hose ob ained by
p e ious esea ch (Abdelmo aal & Abdel-Kade , 2016; Bachmann
e al., 2020). In iew o hese esul s, se e al ques ions could be
aised. Do companies ha e eliable ools and measu es a ailable o
quan i y he achie emen o sus ainabili y objec i es? Is known he
ela ionship be ween wha is measu ed and wha is ewa ded? A e
hese c i e ia s anda dised and compa able ac oss companies? And
abo e all, a e hese c i e ia anspa en ly disclosed o s akeholde s?
I c i e ia and a ge s on he same issue di e subs an ially be ween
i ms, in es o s may ind i di icul o assess and quan i y he com-
pany's pe o mance. As Be g e al. (2019) poin ou , he he e ogene-
i yanddispa i yo c i e iausedbyESG a ingagenciesisa
d awback o in es o s, ha may hinde any a iable emune a ion
scheme linked o ESG c i e ia. In addi ion, Bebchuk and Talla i a
(2022) a gue ha ESG-based compensa ion has se e al p oblems,
pa icula ly in e ms o ESG me ics ocused on na ow and pa ial
measu es, and agency p oblems ela ed o execu i e compensa ions,
all o which makes hese p ac ices o no in e es o s akeholde s.
This can jus i y he esul s ob ained and he need o con inue
explo ing.
In M_u ili ies he commi men o TRAIN o FAIR di e ge depend-
ing on he con igu a ions. Employee aining on en i onmen al issues
is one o he condi ions ha can con ibu e o he p esence o s ock
e u ns. En i onmen al aining has p o en o ha e a highe accep-
ance among elec ici y companies compa ed o non-elec ici y com-
panies, as i is p esen in wo o he h ee con igu a ions and i is also
a quasi-necessa y condi ion. This a gumen is suppo ed by p e ious
esea ch ha highligh he posi i e impac o GHRM p ac ices on he
o ganisa ional inancial pe o mance (Renwick e al., 2013). Con-
e sely, in M_noelec , en i onmen al aining only appea s as absen
in one o he wo causal con igu a ions, sugges ing ha o hese
i ms aining is no cu en ly a ele an a iable. None heless, en i-
onmen al educa ion o he o ganisa ion's s a can ac as a decisi e
ehicle o s eng hening u u e ESG ac ions. Acco ding o Ma ucci,
Iannone, e al. (2022) and Yong e al. (2020), he company's commi -
men o g een aining leads o inc ease employees' awa eness and
engagemen o g een p ac ices while imp o ing en i onmen al pe o -
mance. The ac ha companies wo k wi h limi ed esou ces whose
sca ci y is becoming a majo issue o oday's socie ies, unde lines he
signi icance o suppo ing en i onmen al aining bo h inside and ou -
side he company.
The condi ion ela ed o ai compe i ion policies is o he possible
way o each he p esence o s ock e u ns in M_u ili ies. Speci ically,
non-elec ici y companies show a clea commi men o es ablish a
‘code o conduc ’ ha demons a es hei loyal beha iou owa ds
compe i o s. In M_noelec , his is a quasi-necessa y condi ion o he
p esence o s ock e u ns, p esen in he wo causal con igu a ions
leading o he ou come. This suppo s he idea ha an i-compe i i e
beha iou s can ha e a nega i e impac on he company's sha e p ice
(Bi lingmaye & Hazle , 2000; De Vany & McMillan, 2004), so i is
necessa y o p omo e and publicise he es ablishmen o ai compe i-
ion policies. In con as , in M_elec ai compe i ion policy condi ion
is only p esen in one o he con igu a ions, while i is absen as a co e
condi ion in he o he wo. This widesp ead beha iou among elec ic-
i y companies, which some imes in ol es a i udes such as p ice ixing
o he implemen a ion o di e en monopolis ic ac ics, is no being
penalised in he s ock ma ke . This esul is in line wi h he s udy by
Le Roy e al. (2017), which no es ha in es o s conside ha he
u u e ea nings o la ge i ms a e less a ec ed by con ic ions o
an i-compe i i e p ac ices han hose o smalle ones, a ec ing also
hei s ock e u ns in a lesse way. Gi en he inc easing impo ance o
ESG in o ma ion in in es men decision-making, such une hical
beha iou s may no lead o he p esence o s ock e u ns in he nea
u u e. Geopoli ical in e es s and e en s such as he ene gy c isis in
Eu ope o he wa in Uk aine in 2022 could accele a e social un es
and change he in es o s' pe spec i e a ound he managemen o
elec ici y companies.
LÓPEZ-CABARCOS ET AL.9
15353966, 0, Downloaded om h ps://onlinelib a y.wiley.com/doi/10.1002/cs .2483 by Uni e sidade de San iago de Compos ela, Wiley Online Lib a y on [15/06/2023]. See he Te ms and Condi ions (h ps://onlinelib a y.wiley.com/ e ms-and-condi ions) on Wiley Online Lib a y o ules o use; OA a icles a e go e ned by he applicable C ea i e Commons License