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<p>Environmental, social, and governance (ESG) investments have their rewards and risks. As the world focuses on ESG investments, the media shed light on ESG controversies or concerns, such as tax frauds and harmful products. These controversies place companies at risk and consequently harm their sustainable development. Using a unique supply chain dataset from McDonald’s Corporation, this study (i) develops a two-stage efficiency evaluation framework with a metafrontier range directional model in data envelopment analysis (DEA) and (ii) examines the relationship between DEA efficiency scores and ESG and ESG controversy scores through regression analysis. Results show that research and development efficiency (0.910) contributes more to overall efficiency than to profitability efficiency (0.700). While ESG scores positively impact efficiency, ESG controversies exert a negative effect, except for companies with ISO14000 environmental management certification. This study not only reinforces stakeholder theory by highlighting the critical role of ESG practices in enhancing company efficiency and stakeholder engagement but also provides actionable insights for policymakers and management teams to foster sustainable development through strategic ESG investments and partnerships. Overall, this study underscores the importance of examining stakeholder engagement in achieving sustainable development goals by managing financial and R&amp;D resources, investing in ESG, and addressing ESG controversies among supply chains.</p>

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Examining the differential effects of environmental, social, and governance and controversies on metafrontier efficiencies for sustainable development goals

  • 期刊论文

  • 发表日期：

    2025年1月25日

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  • Qian Long Kweh,
  • Wen-Min Lu,
  • Irene Wei Kiong Ting,
  • Ren Chunya

摘要

Environmental, social, and governance (ESG) investments have their rewards and risks. As the world focuses on ESG investments, the media shed light on ESG controversies or concerns, such as tax frauds and harmful products. These controversies place companies at risk and consequently harm their sustainable development. Using a unique supply chain dataset from McDonald’s Corporation, this study (i) develops a two-stage efficiency evaluation framework with a metafrontier range directional model in data envelopment analysis (DEA) and (ii) examines the relationship between DEA efficiency scores and ESG and ESG controversy scores through regression analysis. Results show that research and development efficiency (0.910) contributes more to overall efficiency than to profitability efficiency (0.700). While ESG scores positively impact efficiency, ESG controversies exert a negative effect, except for companies with ISO14000 environmental management certification. This study not only reinforces stakeholder theory by highlighting the critical role of ESG practices in enhancing company efficiency and stakeholder engagement but also provides actionable insights for policymakers and management teams to foster sustainable development through strategic ESG investments and partnerships. Overall, this study underscores the importance of examining stakeholder engagement in achieving sustainable development goals by managing financial and R&D resources, investing in ESG, and addressing ESG controversies among supply chains.