Resumo

In recent years, ESG performance has begun to emerge in studies of corporate sustainability. ESG performance focuses on stakeholder-oriented management, that is, the social and environmental information disclosed by companies is of interest not only to shareholders, but also to consumers, clients, communities, media, the State, among other interested parties. From this perspective, ESG performance breaks with conventional shareholder-oriented management, since today there is greater institutional pressure for organizations to contribute to sustainable development and social well-being.

It is still unclear how national forces affect ESG performance in the energy sector. Energy companies work directly with natural resources and therefore need to respond adequately to regulation, social expectations, and international agreements. Literature review by Latapí Agudelo et al. (2020) showed that most studies on ESG performance are focused on the study of European and Asian countries. It is necessary to expand what is known about ESG performance to other countries.Therefore, our study aims to investigate the role of the country's institutional quality on the ESG performance.

A substantial number of papers use Institutional Theory to explain how the institutional environment influences the environmental behavior of companies. To measure this institutional environment, different approaches have been used: institutional pressures presented by DiMaggio and Powell (1983); cultural system of countries developed by Hofstede (1983); institutional pillars defined by Scott (1995); Variety of Capitalism approach by Hall and Soskice (2001) and national business system by Whitley (2003).

Our study has a sample of 412 companies based in the 19 countries that make up the G20 and analyzes 4 years: from 2016 to 2019. The dependent variable is ESG performance, which according to Ortas et al. (2019), it is a multidimensional construct composed of social and environmental results of companies related to different stakeholders. The independent variables represent the institutional quality of the countries. Institutional quality was measured by four country characteristics: rule of law, economic and financial development, human capital formation and exposure to international trade.

The findings reveal that institutional quality matters for ESG performance. Companies that are based in countries with greater economic freedom and in countries that favor the trade of their companies in the international market tend to have better engagement in environmental, social and governance issues. Furthermore, the results confirm that in countries with better education, companies tend to have better governance.

Our results show that not only do internal factors interfere with ESG performance, but also institutional factors have a significant effect on companies' performance in environmental and social issues. These findings reinforce the theoretical foundations of Institutional Theory, which states that organizational behavior is shaped by the national context in which firms operate. The importance of this study also resides in the fact that there are still no studies that relate institutional quality and ESG performance specifically in the energy sector.

Daugaard, D., & Ding, A. (2022). Global Drivers for ESG Performance: The Body of Knowledge. Sustainability (Switzerland), 14(4), 1–21. Ortas, E., Gallego-Álvarez, I., & Álvarez, I. (2019). National institutions, stakeholder engagement, and firms’ environmental, social, and governance performance. Corporate Social Responsibility and Environmental Management, 26(3), 598–611.