The impacts of the implementation of ESG plams in regards to investors' perception of the company and the companies performance

Abstract

This academic study tackles one of nowadays’ most (picante) topic, the development of Corporate Social Responsibility (CSR) in the business world. In the literature review, the concept of CSR will be introduced and its theoretical framework will be examined. Additionally, Environmental, Social and Governance (ESG) policies will be introduced, and its effect on firms’ reputation and investor’s perception of companies that include these policies will be evaluated. Furthermore, ESG rating agencies’ work will be critically analysed, as investors have recently started to use these ratings in their investment decision processes. Moreover, studies that evaluate the impact that the implementation of ESG plans has on firms’ performance will be observed. To investigate these subtopics, semi-structured interviews (primary research) to directors of Spain’s most important utility company will be conducted. This company is widely recognised for having a well-defined Corporate and Social Responsibility system. The results obtained from the interviews demonstrate that: Firstly, companies still have CSR theories as their roots. Secondly, the compliance with ESG policies improves investor’s perception of the company. Thirdly, ESG rating agencies require regulation to use a common methodology between them and, therefore, make the ratings comparable and homogeneous. Finally, the results from the interviews certify the fact that the implementation of ESG plans has a positive effect in firms’ performance, which is visible in the long term