The impact of environmental, social and governance performance on brand value: The role of the digitalisation level

Abstract

Purpose: Studying the role of environmental, social and governance (ESG) performance in enhancing brand value is strategically important for promoting sustainable development. Design/methodology/approach: Using panel data for 126 different brands over 10 years, we empirically analyse the impact of ESG performance on brand value, considering the moderating role of the digitalisation level. Findings/results: Firstly, the impact of ESG performance on brand value exhibits a U-shaped relationship. Secondly, the digitalisation level negatively moderates the U-shaped relationship. Thirdly, the effect of ESG performance on brand value is mainly on the sub-items of environment and social responsibility, while the effect of governance is not significant. Practical implications: Firstly, firms should recognise the complex relationship between ESG performance and brand value, and strive to find a balance between economic benefits and sustainable development. Secondly, firms can utilise digital technology and platforms to communicate and interact with consumers, integrating ESG principles into their daily brand activities. Thirdly, investments in environmental and social responsibility are more meaningful for improving brand value. Originality/value: Firstly, our study adds value to corporate social responsibility (CSR) and ESG literature by investigating the non-linear impact of ESG performance on brand value. Secondly, we replenish the mechanistic study about how ESG performance affects brand value. Thirdly, we open the black box of the effect of single indicators (E/S/G) on brand value, including the specific direction and strength.

Keywords

• esg performance
• brand value
• reputation signals
• digitalisation level
• u-shaped relationship.