Doing well by doing good: the impact of ESG management on corporate efficiency

This study investigates the impact of Environmental, Social, and Governance (ESG) practices on business performance, focusing on major Korean companies. To rigorously assess the efficiency of ESG management, we apply a meta-frontier analysis, acknowledging that firms with varying ESG strategies may experience different outcomes. Using ESG data from the Korea Corporate Governance and Sustainability Institute, our findings reveal a complex, nonlinear relationship between ESG management and financial performance. Companies with moderate to strong scores across all ESG dimensions appear to occupy a ‘sweet spot’, effectively managing risks and opportunities while avoiding excessive costs. In contrast, firms with the highest ESG scores may face diminishing returns due to substantial investments. Overall, ESG value creation hinges on a strategic balance across pillars rather than on maximizing individual components.