The impact of sustainability governance, country stakeholder orientation, and country risk on environmental, social, and governance performance

This study examines how the governance of sustainability projects as collaborative, in-house, or outsourced projects, affects corporate environmental, social, and governance (ESG) performance. Hypotheses are developed that collaborative sustainability projects achieve the greatest levels of ESG performance, followed by in-house projects, and then outsourced projects. Furthermore, moderating hypotheses hold that these relationships are affected by two country-level variables: country stakeholder orientation and country risk. Using hierarchical linear modeling and regression analysis, with data from the Sustainalytics and Bloomberg ESG databases for 459 firms in nine countries, support was found for the comparative impacts of sustainability governance on ESG performance. Namely, collaborative governance produced the greatest ESG performance benefits, followed by in-house and outsourced as hypothesized. Country stakeholder orientation generally increases these effects; however, the country risk hypotheses are not supported. This study contributes to the literature by demonstrating that all forms of sustainability governance can improve ESG performance; however, the degree to which each one contributes to ESG performance varies. In addition, institutional context clearly matters, because countries where a high stakeholder orientation exists appear to facilitate the implementation of in-house, outsourced and collaborative sustainability initiatives.