Zeroing in on the Zeroes: CSR/ESG Inaction as a Choice

Abstract

Corporate social responsibility (CSR) empirical scholarship overwhelmingly relies on a few archival datasets to examine firms’ action: strengths, concerns, and controversies. Yet persistently overlooked are salient issues with no current corporate action, represented by zeroes. These zeroes, in Morgan Stanley Capital International/Kinder, Lydenberg, Domini (MSCI/KLD) data, are not missing data. Rather, zeroes signify a lack of observable action on salient issues (which we term, inaction). Persistently ignoring zeroes, we argue, distorts empirical findings and masks corporate inaction. When aggregated across companies, overlooked zeroes can legitimize firms’ failure to address salient social or environmental issues. We discuss the importance of scrutinizing zeroes, explain how scholars inadvertently ignore them, explore implications, and provide alternative modeling choices. Our goal is to highlight conceptual and methodological blind spots that may meaningfully affect environmental, social and governance (ESG) research. We conclude by exploring how theoretical attention to these potentially information-rich zeroes can illuminate corporate behavior, including inaction on salient ESG issues.

Keywords

corporate environmental performance corporate social responsibility MSCI Poisson regression sustainability

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