ESG performance and firms’ business and geographical diversification: An empirical approach
基于2002至2020年欧洲斯托克50指数成分股数据，研究发现业务多元化程度越高、业务分布越不对称的企业ESG评分越高，但地域多元化对ESG无显著影响。
Diversification is primarily associated with improved performance, although the increasing complexity of conglomerates may offset these benefits. ESG scores and their dimensions serve as performance indicators and may also be risk components influencing cash flows. This study aims to investigate the relationship between ESG performance and firms’ diversification. We hand-collected data on business segments and geographical diversification from the constituents of the Euro Stoxx 50 over a large period, from 2002 to 2020. Our findings indicate that geographical diversification does not influence ESG variability. However, better ESG scores are observed in firms with more business segments, that do not have a dominant business segment with a significant role in the firm nor are concentrated in the most representative business segments. However, better ESG scores are also associated with greater asymmetry in the contribution of each business segment to the entire group. Collectively, we shed light on the importance of business diversification in improving sustainability performance across ESG dimensions.