Abstract | Our study investigates the influence of business strategy heterogeneity on corporate sustainability, as measured by ESG disclosure ratings. Utilizing a dataset comprising U.S. non-financial firms over 2005 to 2019, we find a significant negative relationship between firms adopting a prospector strategy and their ESG ratings, suggesting that firm emphasizing aggressive growth, innovation, and risk-taking tend to attain lower ESG ratings compared to defender and analyzer firms. Further, we observe that the adverse association between a prospector strategy and ESG ratings is accentuated under conditions of weaker firm-level information and governance frameworks and during periods characterized by heightened policy uncertainty. Overall, as COP28 provides a platform for international collaboration and policy formulation to combat climate change, this study serves as a timely reminder for businesses to reassess and realign their strategies to be in harmony with the global sustainability agenda. |
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