Purpose: This paper aims to investigate if and to what extent ESG practices are influenced by innovation, measured by investment in research and development (R&D), and the number of patents developed by companies. Design/Methodology/Approach: To test our hypothesis, we estimated a regression model for the panel data considering a time horizon of eight years. The analysis was conducted on a sample of listed firms operating in the industrial sector in France, Germany, Italy, Spain, the United Kingdom, and the United States. Findings: The empirical analysis shows that there is a positive and significant relationship between ESG practices and innovation. Companies investing more in R&D and patents have better ESG performance. Originality/Value: This study contributes to the existing literature by improving the understanding of the importance of innovation in improving ESG practices for firms in the industrial sector. Furthermore, it provides empirical evidence of the ability of innovation to be a valuable tool for sustainable industry development through R&D investment and patent development.

The Effect of Innovation on Environmental, Social,and Governance (ESG) Practices

Grazia Dicuonzo
;
Francesca Donofrio;Simona Ranaldo;Vittorio Dell'Atti
2022

Abstract

Purpose: This paper aims to investigate if and to what extent ESG practices are influenced by innovation, measured by investment in research and development (R&D), and the number of patents developed by companies. Design/Methodology/Approach: To test our hypothesis, we estimated a regression model for the panel data considering a time horizon of eight years. The analysis was conducted on a sample of listed firms operating in the industrial sector in France, Germany, Italy, Spain, the United Kingdom, and the United States. Findings: The empirical analysis shows that there is a positive and significant relationship between ESG practices and innovation. Companies investing more in R&D and patents have better ESG performance. Originality/Value: This study contributes to the existing literature by improving the understanding of the importance of innovation in improving ESG practices for firms in the industrial sector. Furthermore, it provides empirical evidence of the ability of innovation to be a valuable tool for sustainable industry development through R&D investment and patent development.
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Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/11586/391833
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