Research analysis on the impact of ESG on corporate value

Abstract

The concept of Environmental, Social, and Governance (ESG) highlights the sustainable development philosophy that balances them, laying down a quantifiable and systematic pathway for sustainable green development.Most studies focus on the impact of single dimensions, or only analyze the linear impact of ESG as a whole on company value. However, the multidimensional nature of ESG makes its mechanism of influencing company value more complex and varied. This study utilizes the concept of set theory and employs the fuzzy-set Qualitative Comparative Analysis (fsQCA) method to delve into how ESG affect company value from a configurational perspective. Given the pharmaceutical industry subjected to higher social and ethical requirements and diverse risks, including challenges in research and development, production processes, waste disposal, raw material sourcing, and product distribution and recalls. Therefore, it receives broader attention in terms of ESG. According to the ESG Development White Paper released by Zhuoding Consultancy in 2022, the pharmaceutical industry leads in the number of ESG reports published, making it the chosen sample industry for this study.The research findings are as follows: Firstly, single elements within the ESG framework do not constitute necessary conditions for high corporate value. Secondly, companies can enhance their value through three differentiated ESG strategies.Lastly, there is a substitutive relationship between community performance and shareholder performance, indicating that under the current Chinese context, corporate ESG actions have not fully transitioned from a shareholder interest-led approach to a broader stakeholder interest-led approach