Interplay between environmental, social and governance coordinates and the financial performance of agricultural companies

Abstract

On the complex framing of the agricultural fields, related to the corporate social responsibility (CSR), the general objective of this paper is to assess the impacts of environmental, social and governance (ESG) credentials of CSR and human capital features on the financial performance of agricultural companies. The data consists of a sample of 412 public companies from the Thomson Reuters Eikon database, with data for 2020, operating in 17 agricultural areas with headquarters allocated around the world. The methodological endeavor embeds two econometric procedures, multifactorial models of robust regression and structural equation modelling (SEM). The research results bring new evidence to underline the risks related to the sustainability of the financial performance of agricultural companies and the decisive role played by the ESG dimensions to counteract these risks, particularly by the environmental pillar, along with CSR specific strategies and human capital characteristics (management board and employees). We propose several strategies for companies operating in agricultural fields in order to enhance profitability by CSR measures.