Socio-Economic Factors Affecting ESG Reporting Call for Globally Agreed Standards

Round 1

Reviewer 1 Report

The paer examines the ESG reporting and the impact of political and economic factors on ESG indices. Below, some suggestions I hope useful for improving the paper.

Abstract: I think it is necessary to clarify here the sectors, listed/no listed and nationality (the authors say generally countries, which is the macro-area considered?) of the sample. Besides, it is important to say (shortly) what the authors mean for composite ESG index. Then they introduce the ESG performance. I think they have to clarify which is the variable they are investigating (the link between ESG index and ESG performance and then the link with the ESG reporting). In other words, it is important to clarify better the research question and the focus of the paper.

Introduction: also here the authors should explain better their research question. This section needs to be more focused on the specific issue.

Literature review: what authors mean when they talk about ESG index? they have to say (which is the source? public source? it refers to performance?)

The compliance with european regulation on ESG disclosure must be updated, considering the entry (2024) of the CSRD 2022/2464). Moreover, maybe this aspt (compliance with regulation) must be included in the introduction rather than in the literature review?

In general, the authors use many citations in the text (even if using ""). I think they shoud be decreased.

Here in the review the authors put the Hp, I think they must be included (also) in the introduction

Methodology: 139 countries ok, but the criteria? all over the world? in certain macro-areas? The period is long, why it starts from 1984? there is a specific reason? Soe details about the companies must be provided (sector is relevant for ESG issues, as well as the listing or not)

Policy implications..: this section is not adequately focused on policy implications and limitations......It must be changed to be complaint with the title. there is also the need of more extensive disccussion of the results

Conclusion: the same for the this section. Everything is too much focused on the reporting. Which is the contribution of the study? which are the implications for companies?

 Good luck for the next iteration of the paper.

Author Response

Please see the attached file

Author Response File: Author Response.pdf

Reviewer 2 Report

The article deals with an important topic that is undergoing a dynamic process of evolution in terms of regulations, reporting methods by financial and non-financial companies. Numerous EU institutions create regulations and develop measures to measure numerous ESG indicators and reporting methods.

The structure of the work is appropriate. The authors presented the problem in the introduction and review of the literature and empirical research, and indicated the main research goals. The work uses the right research tools for a long period of time and a large sample of 139 countries. The model, test results and their interpretation are correct. Conclusions as well.

Nevertheless, although the authors point to systemic risks (mainly financial) resulting from economic and social conditions. It would even be appropriate to briefly point out that ESG methods are evolving towards physical risks and transformation. Especially companies that are obliged by law to modernize their assets must take more ecological actions. Many investment projects, especially long-term ones, are carefully assessed by banks when granting a loan. Low standards in the field of ESG, including environmental requirements, will mean more expensive loans for companies, and thus will affect financial results. It's worth it, maybe briefly but it shows a very practical dimension of ESG in the field of financial risks.

In terms of econometrics, the results of the model and tests indicate the correct use of statistical tools. The language style and editorial preparation are also correct.

Recommends the article for the Issue, after supplementing with a broader issue of financial risks related to ESG.

Author Response

Please see the attached file

Author Response File: Author Response.pdf

Reviewer 3 Report

The time range taken into consideration for the analysis is too broad to make an assessment in relation to the recently defined ESG framework, the concepts relating to pillars E, S, G have also evolved in recent years. Properly motivate, or alternatively reduce the time range in a way more suited to the research objectives

 

The choice of taking many countries with macroeconomic and regulatory contexts (also in terms of Corporate governance, social inclusion, and Environmental) very distant from each other is also too generic; it would be advisable to stratify the analysis variables by macro geographical area also in relation to the stage of regulatory framework on a research topic

The objective of the paper is not very clear; in the abstract, we read that we want.." that the authors investigate the effect of socio-economic factors on ESG (what? is not defined)

 

The main findings are not discussed with respect to the research questions (I-IV) which are not even mentioned in the conclusions

The authors say: "Events leading up to 2015 that would have had an impact on the Governance Component were: (a) the collapse of Enron and WorldCom causing the “dark side of business” in the first decade of the new century, (b) and the Bernie Maddoff fraud case7 where the defendant was sentenced to 150-years incarceration for the largest Ponzi Scheme in History, (c) the Barclay’s and Libor Scandal in 2012 in the UK and (d) also in the UK in 2012 the court found quilty (?) and sentence (?..not clear)  to 10 years in prison Former fugitive Asil Nadir for the theft of nearly £29m ($46m) from his Polly Peck empire more than 20 years ago...How can these events, a mix of mismanagement and economic-financial problems, be shown to have had an impact..claims made on what logical arguments or empirical data are based.

 

It should be emphasized that in Europe EBA, EFRAG, ESRB, ECB, and European Commission created, in the last months, an essential regulatory framework on ESG disclosure 

Finally, there seems to be an underlying misunderstanding; it seems that in the various arguments used, ESg disclosure is confused with ESG ratings, but these are obviously different arguments. Perhaps it would be appropriate to clarify, given that the work refers indiscriminately to ratings

ESg and the ESG disclosure

 

Author Response

Please see the attached file

Author Response File: Author Response.pdf