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Article

How Does Corporate ESG Management Affect Consumers’ Brand Choice?

by
Hyuck Jin Lee
* and
Tae-hwan Rhee
Department of Economics, Sejong University, Seoul 05006, Republic of Korea
*
Author to whom correspondence should be addressed.
Sustainability 2023, 15(8), 6795; https://doi.org/10.3390/su15086795
Submission received: 9 February 2023 / Revised: 22 March 2023 / Accepted: 1 April 2023 / Published: 18 April 2023
Browse Figures
Versions Notes

Abstract

:
To overcome the serious climate crisis, the world must achieve carbon neutrality. Corporate participation is essential to achieve carbon neutrality, and ESG management is required to realize this. Additional efforts and costs are involved for a company to manage ESG. If a company’s ESG management is helpful for the company’s sustainable growth, the company will be willing to endure the effort and cost. Therefore, it is necessary to find out the impact of corporate ESG management on the brand. This study empirically analyzed the effects of corporate ESG management on brand image, brand attitude, brand attachment, and brand loyalty. ESG activities were divided into environmental and social and governance, to classify their impact. As a result of the study, it was found that environmental activities did not have a positive effect on brand image, brand attitude, and brand attachment. Social and governance activities were found to have a positive effect on brand image and brand attitude. In addition, it was found that social and governance activities affect brand loyalty through brand image, brand attitude, and brand attachment. The results of this study provide practical implications for corporate ESG management, and have theoretical significance in that they have expanded ESG-related research areas to consumer behavior, corporate strategy, and future economic fields.

1. Introduction

Under the heightened climate crisis, 136 countries around the world, including the US, EU, China, Japan, Germany, and Korea, have declared carbon neutrality by 2050, and governments of each country are mandating ESG implementation by mobilizing laws and regulations [1]. ESG was mainly recognized as a factor that investors should consider when investing in companies, but recently, ESG management has emerged as a key strategy for sustainable growth of companies, expanding its scope to business goals and activities, and affecting consumers’ brand choices [2].
The UNEP FI (United Nations Environment Programme Finance Initiative) proposed eco-friendly, social contribution, and transparent governance as measures of non-financial performance that stakeholders should consider in addition to financial performance when making investment decisions for companies [3]. Efforts to improve the non-financial responsibility of companies, including environmental, social, and governance, are the driving force for sustainable management of companies and key elements of the future economic society. ESG, which has become a key element in non-financial performance, has since evolved into the UN Principles for Responsible Investment (PRI), and the importance of corporate social responsibility (CSR) is being emphasized worldwide. In the capital markets of major developed countries such as the United States, Europe, and Japan, socially responsible investment (SRI) investing in eco-friendly and ethical companies is active, and ESG management of companies is used as a key indicator for investment [4].
In 2015, the UN announced the Sustainable Development Goals (SDGs) to be achieved by 2030. The SDGs are essential tasks that the world must achieve through cooperation for the sustainable future of mankind, and have 17 goals, 169 targets, and over 330 performance indicators [5]. If the SDGs are goals, ESG can be said to be the means that companies must implement to achieve those goals.
Recently, as consumers’ interest in corporate ethical awareness, along with the quality of products and services has increased, companies are concentrating their efforts on corporate social responsibility (CSR) in addition to financial performance [6]. However, despite heightened consumer interest in ESG management and strong social demand for sustainable development, corporate management strategies for the Sustainable Development Goals (SDGs) have not spread [7].
According to the UN Global Compact, the biggest difficulty that companies face in promoting SDGs-related work is ‘low public awareness (55.3%)’, suggesting that general consumers need to improve SDG awareness [8]. However, research that investigates and analyzes consumer awareness is lacking [9], so it is necessary to identify which activities of companies are important as social responsibilities from the point of view of consumers and how the SDG strategies of companies affect consumers.
How does ESG, the sustainable development goals (SDGs) policy, affect consumers?
Existing studies on ESG are mostly studies on financial performance [2]. Studies on the impact of ESG management of companies on consumers, focusing on primary data such as surveys, are rather rare [9]. In particular, empirical studies that have analyzed the impact of ESG activities by linking them with brand image, brand attitude, brand attachment, and brand loyalty are not known.
Corporate participation is essential to overcome the climate crisis. Additional efforts and costs are involved for a company to manage ESG. If a company’s ESG management is helpful for the company’s sustainable growth, the company will be willing to endure the effort and cost. Therefore, it is necessary to find out the impact of corporate ESG management on the brand. This study aims to investigate the impact of corporate ESG management on brand image, brand attitude, brand attachment, and brand loyalty.
This study leads to the following research questions. (1) How does ESG management affect brand image, brand attitude, and brand attachment? (2) What is the relationship between brand image, brand attitude, and brand attachment? (3) How do brand image, brand attitude, and brand attachment affect brand loyalty?
The results of this study are expected to provide empirical evidence that multidimensionally analyzes and explains the impact of ESG management on consumers. These findings have significant implications for theory and practice.

2. Literature Review

2.1. ESG and SDGs

ESG is a combination of the first letters of environmental, social, and governance. ESG management refers to the criteria for judging the non-financial performance of companies that measure social contribution in each field, and is an activity that achieves sustainable growth by reducing disadvantages that companies have on the environment and society and increasing the efficiency of governance [10].
The Sustainable Development Goals (SDGs) were adopted by the UN in 2015 as a universal call for action to end poverty, protect the planet and achieve peace and prosperity for all people by 2030. The SDGs are international common goals to solve and implement universal problems of mankind (poverty, disease, education, women, children, refugees, conflicts, etc.), global environmental problems (climate change, energy, environmental pollution, water, biodiversity, etc.), and economic and social problems (technology, housing, labor and management, employment, production, consumption, social structure, etc.), by 2030 [5]. The 17 goals of SDGs can be grouped into environmental, Social, and Governance of ESG.
Ben-Amar et al. [11] said that the sustainability of a company increases by successfully implementing ESG management. Rezaee [12] stated that companies can maximize corporate value only when they achieve the performance of ESG activities. As such, it can be confirmed by preceding studies that corporate ESG activities achieve sustainable growth.
On the other hand, there are precedent studies that show that companies’ efforts in non-financial performance cause unnecessary expenditure, which rather undermines corporate value. Barnea and Rubin [13] said that ESG management rather deteriorates financial status, due to additional cost expenditures. Bae et al. [14] argued that non-financial performance has a very small impact on corporate value, and only increases expenditure. Chen et al. [15] pointed out that, as a result of verifying the effect of introducing mandatory ESG disclosure for companies and forcing socially responsible investment over a certain percentage, there were effects such as a reduction of pollutants after the introduction of the system, but companies showed a decrease in profitability and a decrease in stock price return. These results suggest that ESG management, which did not voluntarily participate, can rather adversely affect corporate value.
Despite the growing consensus that companies striving for sustainability based on ESG management can have future competitiveness, research on ESG is still insufficient, and most of the existing studies are focused on finance and evaluation scales [16]. However, for effective business management, the analysis needs to be conducted in consideration of non-financial aspects such as perception and reputation [17]. In particular, empirical consumer-centered research using primary data such as surveys is needed, rather than research on the financial performance of ESG activities using investor-centered secondary data [9].
This study aims to expand the ESG-related research area by analyzing ESG management from a consumer-centered perception and perspective.

2.2. Effects of ESG Management on Brand Image, Brand Attitude, and Brand Attachment

Brand image is consumers’ perception of the tangible and intangible parts of a company or the impression they form of the company. Brand image helps consumers make decisions and influences consumers’ purchasing behavior afterward [18]. Brand attitude refers to consumers’ positive or negative evaluation of a brand based on brand-related stimuli or consumers’ beliefs. Brand attitude is related to the benefits or losses that consumers directly gain, based on their actual experiences, but it is also formed by being influenced by brand image through indirect experiences [19]. Brand attachment refers to the strength of the bond that connects consumers and a brand [20].
In various contexts, multiple evidence supports the significant impact of a company’s management activities on brand image, brand attachment, and brand attitude. Chen et al. [21] explored the structural relationship of excessive product packaging on brand attitude, brand image, and brand attachment, targeting Taiwanese consumers, and found that excessive product packaging had a negative effect on green brand image and green brand attitude. Namkung and Jang [22] said that a company’s eco-friendly activities have a positive effect on brand image and brand loyalty. Similarly, Jeong et al. [23] argued that a company’s eco-friendly facilities and systems have a positive effect on brand image and brand attitude. In addition, a company’s eco-friendly activities have a positive effect on brand attachment [24].
Based on the results of these preceding studies, the following hypotheses were established to investigate the effects of a company’s ESG activities on brand image, brand attitude, and brand attachment.
H1-1. 
Environmental activities have a positive impact on brand image.
H1-2. 
Social and governance activities have a positive impact on brand image.
H2-1. 
Environmental activities have a positive impact on brand attitude.
H2-2. 
Social and governance activities have a positive impact on brand attitude.
H3-1. 
Environmental activities have a positive impact on brand attachment.
H3-2. 
Social and governance activities have a positive impact on brand attachment.

2.3. The Relationship between Brand Image, Brand Attitude, and Brand Attachment

Companies grow by forming complementary relationships with factors such as brand image, brand attitude, and brand attachment. Existing studies show that a company’s activities and consumer experiences affect each other in the order of brand image, brand attitude, and brand attachment [25]. Chen et al. [21] said that the better the brand image, the greater the influence on the brand attitude, and the green brand attitude has a positive effect on the green brand attachment. Ha and Kim [26] verified the effect of brand image on brand attitude and found that emotional image has a positive effect on brand attitude (brand favorability and quality favorability). Brand attitude is an overall evaluation index of consumers toward a brand, and a positive brand attitude means that the relationship between consumers and the brand is good, which affects brand attachment [27]. Consumers with brand attachment do not change their brand attitude or easily move to another brand [28].
The following hypotheses were established by synthesizing these research results.
H4. 
Brand image positively affects brand attitude.
H5. 
Brand attitude positively affects brand attachment.

2.4. Effect of Brand Image, Brand Attitude, and Brand Attachment on Brand Loyalty

Prior research shows that developing ways for companies to increase consumer brand loyalty is one of the best ways to achieve business success [29]. Brand loyalty leads consumers to continuously and repeatedly purchase a particular brand’s products, and delivers a positive word-of-mouth effect, so companies must increase brand loyalty to maintain a competitive advantage in the market.
Yun [30] confirmed that both brand image and brand attitude have a positive effect on brand loyalty in a study on the effect of coffee brand quality on brand image, brand attitude, and brand loyalty. Li et al. [31] found that brand attachment had a positive effect on brand loyalty in a study that analyzed the mediating effect of customer participation on brand attachment and brand loyalty of social media users in the tourism sector. Lee and Lee [32], in a study on the structural relationship between brand image, brand attitude, and brand loyalty, said that brand image had a significant effect on brand attitude and brand loyalty. Djaelani et al. [33] published research results that brand attitude formed by a company’s activities has a positive effect on brand loyalty. Hwang and Lee [34] verified that brand attachment is a key factor in increasing brand loyalty. A study by Jang [35] confirmed that a strong emotional bond between consumers and a brand increases brand attachment and eventually greatly increases brand loyalty.
Taken together, previous studies show that a company’s activities ultimately influence consumers’ choice and purchase of the brand’s products but, rather than directly affecting consumers’ behavioral intentions, it can be said that a company’s activities affect brand loyalty through parameters such as brand image, brand attitude, and brand attachment. Therefore, the following hypotheses were established, based on the inference that brand image, brand attitude, and brand attachment formed by a company’s ESG activities would each affect brand loyalty.
H6. 
Brand image positively affects brand loyalty.
H7. 
Brand attitude positively affects brand loyalty.
H8. 
Brand attachment positively affects brand loyalty.

2.5. Research Model

This study aims to explore the impact of ESG, the UN’s Sustainable Development Goals (SDGs) policy, on consumers by integrating the theoretical background and empirical evidence mentioned above. To this end, ESG policy is divided into environmental (E), and social (S) and governance (G), and their impact on brand image, brand attitude, brand attachment, and brand loyalty is compared. To explore this, the conceptual model shown in Figure 1 was developed.

3. Methodology

3.1. Measurement Items

In this study, measurement items were developed by referring to items whose reliability and validity was verified in previous studies, to measure the six components of the proposed model. The measurement items of environmental, and social and governance in Table 2 were reconstructed based on the measurement items used in the studies of Galbreath [10], Min and Kim [36], Ahn and Sung [37], and Kim [38], and the evaluation items of the Dow Jones Sustainability Index (DJSI) of the United States [39], the Morgan Stanley Capital International’s ESG Index (MSCI ESG Index) [40] and Korea’s K-ESG guidelines [7]. Brand image was measured using four items by referring to the studies of Keller [41] and Liou and Namkung [42]. Brand attitude was measured using three items of Hwang and Hyun [43] and Mitchell and Olson [44]. Brand attachment was measured using four items that were developed by Jang et al. [45], and Hwang and Lee [46]. Finally, brand loyalty was measured using three items that were adapted from Zeithaml et al. [47] and Hwang and Park [48]. All items were measured on a 7-point Likert scale, ranging from 1 (strongly disagree) to 7 (strongly agree).

3.2. Data Collection and Analysis Method

Before conducting the survey for this study, a preliminary survey was conducted to determine a research method to derive more accurate results on the impact of ESG on consumers. In the preliminary survey, it was found that there were many people who did not know about ESG, and they distinguished environmental activities during a company’s ESG activities, but they did not distinguish well between social activities and governance activities. Therefore, in the survey for this study, ESG was divided into environmental, and social and governance, and a questionnaire was created to measure its impact, and the survey subjects were selected through three-step selection questions. The first step was a question about whether they knew about ESG, and consumers who were aware of the ESG concept were selected first. In the second step, questions were asked without presenting the definition of ESG and cases of ESG activities of companies, and in the third step, questions were asked after explaining the definition of ESG and cases of ESG activities of companies. ESG management cases of companies were provide, centering on cases that consumers could understand and companies that are well-known and consumers know a lot about. Among the respondents, those whose responses in the second and third steps did not match, were excluded. By excluding respondents who did not know about ESG from the first-step question and excluding respondents whose responses did not match the second and third questions, the number of survey subjects was greatly reduced. In order to secure a larger sample, this questionnaire was additionally conducted three times. Through this, a total of 682 usable data were secured and used for statistical analysis.
The data collected to verify the research problem set in this study were analyzed using SPSS 25.0 and Smart PLS 3.0. Frequency analysis was conducted to find out the demographic characteristics of the samples used in this study. In addition, a confirmatory factor analysis was conducted to secure the validity of the measurement items and determine the suitability of the structural equation model. Correlation analysis was conducted to measure the association between the derived factors, and structural equation model verification was conducted to verify the hypotheses presented in this study. Hair et al. [49] and Weston and Gore [50] suggested that more than 200 samples are suitable for performing CFA and SEM as maximum likelihood estimation methods.

4. Data Analysis

4.1. Profile of Survey Respondents

Table 1 shows the profiles of survey respondents. The survey respondents were 49.4% male and 50.6% female, with 27.3% in their 20s, 27.0% in their 30s, 24.0% in their 40s, 16.1% in their 50s, and 5.6% in their 60s. The majority of respondents had a bachelor’s degree (58.6%). Regarding marital status, 45.3% were unmarried and 46.2% were married. Average monthly income was 21.0% in the USD 2001 to USD 3000 range, 20.1% in the USD 3001 to USD 4000 range, and 16.0% in the USD 4001 to USD 5000 range.

4.2. Confirmatory Factor Analysis (CFA)

Construct validity indicates whether the measurement tool accurately measured the object of the study referred to as a construct, and can be verified by evaluating convergent validity and discriminant validity [51]. In this study, the reliability of the measurement tool was confirmed through the internal consistency evaluation using Cronbach’s α, and the construct validity of the measurement tool was confirmed by evaluating the convergent validity and discriminant validity. In addition, CFA was conducted for latent variables included in the study design, to verify construct validity [52]. If the value of Cronbach’s α is higher than the reference value of 0.7, it is judged that the measurement tool has internal consistency [53]. CFA can be considered to have factor validity if the estimated factor loading value is 0.7 or higher [54]. For more precise judgment, average variance extracted (AVE) and construct reliability (CR) are calculated, and when the value of AVE is 0.5 or more and the value of CR is 0.7 or more, it is judged to have convergent validity [55]. In addition, if the AVE value is calculated as higher than the squared value of the correlation coefficient between each construct, it is considered to have discriminant validity [56].
Table 2 shows the results of CFA. This model showed an acceptable fit (χ2 = 287.112, df = 174, p = 0.000, GFI = 0.875, AGFI = 0.834, NFI = 0.908, CFI = 0.962, and RMSEA = 0.058) [57]. The value of Cronbach’s α of each variable was 0.836 to 0.912, which was calculated as higher than the reference value (0.7), indicating that the measurement tool has internal consistency. The factor loading values ranged from 0.746 to 0.916, which was higher than the reference value (0.7), confirming that there was factor validity. The AVE values ranged from 0.508 to 0.689, higher than the reference value (0.5), and the CR value ranged from 0.755 to 0.889, which was higher than the reference value (0.7), confirming convergent validity.
Table 3 shows the results of the discriminant validity review. All values of AVE are greater than the square of the correlation (φ2) between all paired constructs, indicating a high level of discriminant validity. As a result, it was confirmed that the reliability and validity of the measurement tool were secured.

4.3. Structural Equation Modeling (SEM)

SEM analysis was used to confirm the proposed hypothesis, and the results are shown in Figure 2. As a result, the fit of the model to the data was found to be appropriate (χ2 = 279.062, df = 170, p = 0.000, GFI = 0.881, AGFI = 0.839, NFI = 0.913, CFI = 0.965, and RMSEA = 0.057). According to the analysis results, it was found that environmental activities did not have a positive effect on brand image (β = 0.162, t = 1.168), brand attitude (β = 0.073, t = 0.494), or brand attachment (β = 0.185, t = 1.476). Therefore, hypotheses 1-1, 2-1, and 3-1 were rejected. On the other hand, social and governance activities were found to have a positive effect on brand image (β = 0.432, t = 3.184 *) and brand attitude (β = 0.359, t = 2.389 *), but did not have a positive effect on brand attachment (β = 0.075, t = 0.598). Therefore, hypotheses 1-2 and 2-2 were supported and hypotheses 3-2 were not supported. In addition, brand image (β = 0.054, t = 0.599) did not have a positive effect on brand attitude. Therefore, hypothesis 4 was rejected. Brand attitude (β = 0.536, t = 6.981 **) was found to have a positive effect on brand attachment, which supported hypothesis 5. Brand image (β = 0.118, t = 2.011 *), brand attitude (β = 0.439, t = 5.516 **), and brand attachment (β = 0.399, t = 5.036 **) were all found to have a positive effect on brand loyalty. As a result, hypotheses 6, 7, and 8 were supported.
Table 4 summarizes the verification of the research hypothesis. The path coefficient (β = 0.432) between social and governance and brand image was larger than that (β = 0.162) between environmental and brand image. This means that when a company provides value for social and governance activities rather than environmental activities in its ESG activities, its brand image improves. In addition, the path coefficient (β = 0.359) between social and governance and brand attitude was larger than that (β = 0.073) between environmental and brand attachment. This means that brand attitude improves when a company provides value for social and governance activities over environmental activities in its ESG activities. Therefore, it can be judged that social and governance activities have a greater impact on enhancing brand image and brand attitude than environmental activities in a company’s ESG activities.

5. Discussion

Recent discussions on corporate management for the environment and society, such as low-carbon economy, sustainable management, and the UN’s Responsible Investment Principles (PRI), reflect the demands of the times for a new type of management method. This study investigated the empirical results of the impact of ESG management on consumers by reflecting on these social issues in academic research. In addition, the effects on the relationship between brand image, brand attachment, brand attitude, and brand loyalty were explored. The results are described and discussed as follows.
First, environmental activities did not have a positive effect on brand image, brand attitude, and brand attachment. Among ESG, environmental activities are the activities with the highest level of awareness and distinction among consumers. The fact that environmental activities did not have a positive effect on brand image, brand attitude, and brand attachment can be considered as due to the fact that consumers’ interest in and level of the environment has increased. Companies should realize the importance of establishing corporate environmental policies based on more accurate information, rather than focusing on environmental activities, because good intentions do not lead to good results. When capsule coffee, instant coffee, and drip coffee were compared, it was thought that capsule coffee would have the most adverse effect on environmental pollution, but as a result of actual analysis, it was found that drip coffee had greater carbon emissions than capsule coffee [58]. The environmental problem of microplastics has led to a global movement to ban plastic straws. Many food service brands, including Starbucks and McDonald’s, have declared an end to the use of plastic straws and replaced them with paper straws. However, paper straws are not recycled, and are discarded as general waste [59]. Rana [60] revealed that paper straws are greater than plastic straws in terms of energy demand and global warming potential, assuming that both paper and plastic straws are discharged as general waste. The higher the energy demand and global warming potential, the more adverse the environmental impact. The energy demand for plastic straws is less than half that of paper straws, and in terms of global warming potential, plastic straws are only one third of paper straws [60]. These studies suggest that environmental activities may have resulted in not having a positive effect on brand image, brand attitude, and brand attachment.
Second, social and governance activities were found to have a positive effect on brand image and brand attitude. On the other hand, there was no positive effect on brand attachment. Brand attitude was found to have a positive effect on brand attachment. Accordingly, it can be seen that social and governance activities do not directly affect brand attachment, but they do affect brand attachment through brand attitude. This suggests that a positive brand attitude must first arise in order for consumers to form strong brand attachment to a company’s social and governance activities. These findings support the research results of Bekar et al. [22], that corporate activities have a significant effect on brand image and brand attitude. Brand image did not have a positive effect on brand attitude. Social and governance activities have an impact on enhancing brand image, but this means that the increased brand image does not form a positive brand attitude.
Third, brand image, brand attitude, and brand attachment all had a positive effect on brand loyalty. This result supports those of previous studies, in that the probability of choosing a brand increases when a positive brand image is formed [61]. It is also consistent with previous studies that found that brand attitude has a positive relationship with brand loyalty, and a positive attitude affects customers’ repurchase intention [62]. It is similar to the results of previous studies that explained that brand attachment plays an important role in generating positive behavioral intentions such as repurchasing goods or services [35]. When the brand image improves, the usage rate of the brand increases, and consumers who like the brand and favorably evaluate the brand form strong ties with it, like to use the brand, and are more likely to use the brand more often in the future. These findings are similar to findings in the previous literature that found positive associations between brand image, brand attitude, brand attachment, and brand loyalty [63].
Fourth, it was found that brand attitude had a positive effect on brand attachment and brand loyalty. When a consumer has a good brand attitude, brand attachment is formed, and they want to use the brand. Previous studies also confirmed that brand attitude is a prerequisite for brand attachment and brand loyalty [64]. The results of this study show the important role of brand attitude in relation to brand attachment and brand loyalty. Brand attitude was found to be a strong predictor of brand attachment. The importance of the impact of brand attitude on brand attachment is frequently mentioned [62] but not widely studied in the ESG context. This study shows that consumers with a positive brand attitude tend to be much more interested in that brand than others. It can also be seen that a positive brand attitude leads to strong brand loyalty. Consumers with a positive brand attitude are more likely to become loyal customers who will say positive things about the brand to family and friends. In addition, this result is meaningful, in that brand attitude is distinct from brand attachment [64]. Consumers are less likely to form brand attachment in a short period of time. Therefore, consumers may take time to form brand attachment, and brand attitude is an important prerequisite for brand attachment. It can be seen that, forming brand attachment to a company’s ESG activities is based on the formation of a positive brand attitude by consumers.
Finally, according to this study, social and governance activities have an effect on brand loyalty through brand image, brand attitude, and brand attachment. These findings are similar to those of previous studies, in that companies’ ESG activities do not directly affect brand loyalty, but indirectly affect it through mediation such as brand image [65]. Brand image and brand attitude formed by corporate social and governance activities not only directly affect brand loyalty, but also affect brand loyalty, through brand attitude and brand attachment. This is a result that confirms the indirect influence of corporate ESG activities on brand loyalty. Corporate social and governance activities do not directly affect brand attachment, but have a positive effect on brand attitude, and brand attitude has a positive effect on brand attachment. Brand attachment formed in this way has a positive effect on brand loyalty. In summary, even if a company engages in ESG activities, rather than consumers reacting immediately to using the brand or showing word-of-mouth intentions, these ESG activities form a positive brand image, brand attitude, and brand attachment, and, through these, ESG can be summarized as having an effect on brand loyalty.

6. Conclusions

This study examined the impact of ESG, the UN’s Sustainable Development Goals policy, on consumers, through the relationship between brand image, brand attitude, brand attachment, and brand loyalty. As a result of the study, it was found that environmental activities did not have a positive effect on brand image, brand attitude, and brand attachment. Social and governance activities were found to have a positive effect on brand image and brand attitude. In addition, it was found that social and governance activities affect brand loyalty through brand image, brand attitude, and brand attachment. It was confirmed that the increase in brand image does not form a positive brand attitude. It was confirmed that the formation of brand attachment should be based on the formation of a positive attitude toward the brand. Companies’ ESG activities do not lead to immediate responses from consumers, so consumers do not use the brand or show word-of-mouth intentions, but these ESG activities create a positive brand image, brand attitude, and brand attachment and affect brand loyalty through these. The results of empirical research on this provide theoretical and practical implications.

6.1. Theoretical Implications

First, the Swiss Re Institute predicted that 13.9% of global GDP would decrease if the global temperature rose by 2.6 °C by 2050, as a response to the current level of the climate crisis without additional greenhouse gas reduction [66]. The European Central Bank (ECB) has warned that other damage to climate change and the associated risks will far outweigh the costs of transition to a low-carbon economy [67]. Amidst this economic crisis, the UN announced the SDGs, a common global plan to end extreme poverty, reduce inequality, and protect the planet, and in 2015, 193 countries adopted the SDGs. Achieving the 2030 target will require hard work, the determination to learn effective methods, and the agility to adapt to new information and changing trends. It also requires individuals, innovations, and actions, and needs to ascertain the impact of corporate ESG management. This study has academic significance, in that it provides a theoretical basis for an ESG strategy to achieve SDGs goals more effectively and efficiently by analyzing the impact of ESG, a means of achieving SDGs, on consumers in this period of economic change.
Second, most of the existing ESG studies have focused on the impact of ESG activities on corporate financial performance from the perspective of investors, while studies on the impact of ESG on consumers are relatively lacking. In particular, there are few empirical studies that have analyzed the impact of ESG activities by linking them to brand image, brand attitude, brand attachment, and brand loyalty. Therefore, this study has theoretical significance, in that it expands ESG-related research areas in consumer behavior, corporate strategy, and future economy fields as an empirical study that analyzes ESG activities by linking them with brand image, brand attitude, brand attachment, and brand loyalty.
Third, most of the existing ESG studies have analyzed the impact of companies’ ESG activities [65]. There are few studies that have classified corporate ESG activities into environmental activities and social and governance activities and analyzed the impact of each. In particular, there is no known study that investigates consumers’ perceptions of companies’ ESG activities, classifies ESG activities based on consumer perceptions, and analyzes the impact of the classified ESG activities on consumers. Previous studies have analyzed ESG activities one-dimensionally, but this study contributes to a better understanding of the impact of corporate ESG activities on consumers by classifying ESG activities multi-dimensionally and presenting the impact of ESG activities on consumers by dividing them into environmental and social and governance, according to differences in consumer awareness.
Fourth, this study confirmed a precedent for the effect of corporate management activities on brand loyalty. Specifically, the correlation between brand image, brand attitude, brand attachment, and brand loyalty was investigated. In previous studies, brand image, brand attitude, and brand attachment were identified as important antecedent factors predicting brand loyalty. This study successfully proposed and verified a conceptual model that effectively shows the process by which corporate ESG activities lead to brand loyalty. It was confirmed that brand image, brand attitude, and brand attachment are the mediators connecting ESG activities and brand loyalty. It has theoretical implications, in that it has grasped the process through which a company’s ESG activities affect consumers. These results provide insight into what scholars should consider as parameters when examining the impact of ESG activities.

6.2. Practical Implications

First, it is judged that companies should establish and promote honest management strategies based on trust with consumers, when managing ESG. Environmental activities did not have a positive effect on brand image, brand attitude, and brand attachment. It is judged that the reason why environmental activities did not have a positive effect is that consumers know a lot of information and accurate facts about the environment, due to the increased interest in and level of knowledge of the environment.
ESG strategies that have betrayed trust can be rather poisonous. The cosmetics brand Innisfree wrapped paper packaging in a plastic bottle and wrote the phrase ‘I am a paper bottle’ on the packaging, but it was discovered and criticized by consumers [68]. Adidas also promoted Stan Smith shoes, saying that they are “50% recycled”, but it turned out to be untrue, and consumers complained. The French Commission on Advertising Ethics pointed out that “it is not clear how it is recycled, and it is an inappropriate promotional text for Stan Smith products that are not made entirely of recycled materials” [68]. In ESG management, companies should prioritize focusing on creating consumer value based on trust.
Second, it is necessary to establish and promote appropriate strategies for ESG management for general consumers. In the meantime, ESG management has been used to provide non-financial information so that investors can make long-term stable investments [69]. Therefore, since ESG-related information was written and used for this purpose, information on corporate ESG activities may be unfamiliar to general consumers. Accordingly, if companies want to improve their brand image and consumers have a positive brand attitude and form strong brand attachment, they must establish and publicize a strategy that allows ordinary consumers to easily understand the company’s ESG management. To this end, it is necessary to promote the education of internal stakeholders on ESG management and communication by department. Only when practitioners who perform brand management, such as management strategy, sales, marketing, and communication departments, establish appropriate ESG strategies and share their will and plans, can they induce an efficient and positive effect on the company’s ESG management for general consumers.
Third, according to the results of this study, since environmental activities, and social and governance activities have different impacts on consumers, strategic activities are needed for companies to efficiently deliver messages such as advertisements. In ESG, each element is related to the others, but they may conflict with each other because the values pursued are different [69]. For example, Unilever created social value in that it provided benefits to low-income households by selling household items such as shampoo and detergent in small packages. However, the environmental value decreased, in that packaging container waste due to small packaging increased. The results of this study provide practical implications, in that companies need to select and focus on the core values of ESG activities.

6.3. Limitations and Future Research

This study guided the ESG management cases of companies mainly through photos and texts used during the survey. Research results may vary, depending on the type of experimental stimuli. Since the results of the study may be different if the case guide method is used as a video, it is thought that meaningful results can be obtained by adding and verifying the case guide method in the follow-up study. In addition, in the future, when more consumers become aware of ESG management and can better distinguish corporate environmental activities, social activities, and governance activities, the analysis and comparison of the impact of corporate ESG management on brands due to changes in consumer awareness will be a meaningful topic for study.

Author Contributions

Conceptualization: H.J.L., Methodology: H.J.L., Writing—original draft: H.J.L., Writing—review and editing: T.-h.R. All authors have read and agreed to the published version of the manuscript.

Funding

This research received no external funding.

Institutional Review Board Statement

The study did not require ethical approval.

Informed Consent Statement

Not applicable.

Data Availability Statement

Not applicable.

Conflicts of Interest

The authors have no competing interests to declare.

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Sustainability 15 06795 g001 550
Figure 1. Proposed conceptual model.
Figure 1. Proposed conceptual model.
Sustainability 15 06795 g001
Sustainability 15 06795 g002 550
Figure 2. Structural model results.
Figure 2. Structural model results.
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Table
Table 1. Profile of survey respondents.
Table 1. Profile of survey respondents.
Variablen (=682)Percentage (%)
Gender
Male33749.4
Female34550.6
Age
20s18627.3
30s18427.0
40s16424.0
50s11016.1
60s385.6
Education level
Less than high school diploma547.9
Associate’s degree14220.8
Bachelor’s degree40058.7
Graduate degree8612.6
Marital state
Single30945.3
Married31546.2
Others588.5
Income level (monthly)
USD 8001 and over142.1
USD 7001–USD 8000578.4
USD 6001–USD 70008111.9
USD 5001–USD 600010715.7
USD 4001–USD 500010916.0
USD 3001–USD 400013720.1
USD 2001–USD 300014321.0
Under USD 2000345.0
Table
Table 2. Confirmatory factor analysis: Items and loadings.
Table 2. Confirmatory factor analysis: Items and loadings.
Construct and Scale ItemsStandardized
Factor Loading		t-ValueCRAVECronbach’s α
Environmental
This brand seems to be good at eco-friendly production and consumption in terms of energy.0.803-0.7550.5080.836
This brand seems to be doing well in responding to environmental management, such as environmental protection activities and compliance with environmental laws.0.79310.984
This brand seems to be good at sustainable production and consumption, such as recycling and using eco-friendly materials.0.78610.936
Social and Governance
This brand seems to be good at expansion of good jobs and labor-management relations, such as job security for workers, welfare benefits, and prohibition of child labor.0.792-0.8480.5820.892
This brand seems to contribute well to the community, such as participation in the community and development of the local economy.0.85613.032 *
This brand seems to be doing well in strengthening global governance, such as strengthening global cooperation.0.88913.657 *
This brand seems to play a good role in the board and management for climate risk management.0.76811.348 *
Brand image
This brand has a differentiated image in comparison with the other brand.0.746-0.8890.6690.906
This brand has good product quality.0.84511.786
This brand has a good reputation.0.87212.215
This brand is reliable.0.90612.658
Brand attitude
Bad–Good0.874-0.8690.6890.906
Negative–Positive0.91617.165
Unfavorable–Favorable0.85215.179
Brand attachment
I love using this brand.0.915-0.8160.5260.912
I am passionate about this brand.0.85616.715
I would feel sorry if this brand ceased its operations. 0.82315.511
This brand is important to me.0.81715.309
Brand loyalty
I say positive things about this brand to others.0.878-0.7780.5360.893
I would like to use this brand more often.0.86515.348
I would like to use this brand in the future.0.84514.819
Goodness-of-fit statistics: χ2 = 287.112, df = 174, p = 0.000, GFI = 0.875, AGFI = 0.834, NFI = 0.908, CFI = 0.962, and RMSEA = 0.058. Notes1: * p < 0.001. Notes2: CR = Construct Reliability, and AVE = Average Variance Extracted. Notes3: GFI = goodness-of-fit index, AGFI = adjusted GFI, NFI = normed fit index, CFI = comparative fit index, and RMSEA = root-mean-square error of approximation.
Table
Table 3. Descriptive statistics and associated measures.
Table 3. Descriptive statistics and associated measures.
AVE(1)(2)(3)(4)(5)(6)
(1) Environmental0.5081
(2) Social and Governance0.5820.757
(0.573)		1
(3) Brand image0.6690.480
(0.230)		0.564
(0.318)		1
(4) Brand attitude0.6890.376
(0.141)		0.422
(0.178)		0.270
(0.073)		1
(5) Brand attachment0.5260.439
(0.193)		0.447
(0.200)		0.496
(0.246)		0.633
(0.401)		1
(6) Brand loyalty0.5360.384
(0.148)		0.579
(0.335)		0.425
(0.181)		0.706
(0.499)		0.729
(0.531)		1
Notes1: SD = Standard Deviation. Notes2: The number in parentheses is the square of the correlation coefficient (φ2). As seen in the results shown in Table 2 and Table 3, all fitness indices satisfy the criteria, so it is judged that the measurement model is suitable.
Table
Table 4. Standardized parameter estimates for structural model.
Table 4. Standardized parameter estimates for structural model.
PathStandardized
Path Coefficients		t-ValueHypothesis
H1-1 Environmental → Brand image0.1621.168Not supported
H2-1 Environmental → Brand attitude0.0730.494Not supported
H3-1 Environmental → Brand attachment0.1851.476Not supported
H1-2 Social and Governance → Brand image0.4323.184 *Supported
H2-2 Social and Governance → Brand attitude0.3592.389 *Supported
H3-2 Social and Governance → Brand attachment0.0750.598Not supported
H4 Brand image → Brand attitude0.0540.599Not supported
H5 Brand attitude → Brand attachment0.5366.981 **Supported
H6 Brand image → Brand loyalty0.1182.011 *Supported
H7 Brand attitude → Brand loyalty0.4395.516 **Supported
H8 Brand attachment → Brand loyalty0.3995.036 **Supported
Notes1: * p < 0.05, ** p < 0.001.
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