Investigating the potential linkage between Corporate Social Responsibility and Intellectual Capital Performance. Evidence from the Oil & Gas industry

Recently environmental, social and governance (ESG) issues had increasingly become a relevant matter for organizations, contributing to relevant changes in several key areas such as the contribution of accounting to enhance the quality level of sustainability disclosure (Unerman and Chapman, 2014; Unerman et al., 2014), the influence in terms of managerial and organizational sustainability approach (Eccles et al., 2011; Comyns et al., 2013; Passetti et al., 2014), the development of specific standards (SASB), the materiality of non-financial information (Eccles et al., 2012; 2015), the drawn-up and assurance of stand alone reports (GRI 2014; Michelon et al., 2015) or integrated reports (Eccles and Krzus, 2010; Eccles et al., 2015) and so on. One of the most discussed field focused on the relationship between Corporate Social Responsibility, Corporate Social Performance and Corporate Financial Performance (Wang et al. 2014). The relevant need to demonstrate a potential influence of ESG factors on financial performance has been investigated in several ways and following different perspectives (Aupperle et al., 1985). Some findings especially emphasized the relevance of issues related to the environmental pillar, such as corporate environmental responsibility, climate change pressures, reductions of greenhouse gas emissions and so on (Kim and Statman, 2012; Cai and He, 2014; Wang et al., 2014) showing often inconsistent and conflicting results about this potential association with corporate performance through different econometric methods. Most of these studies evaluated the Corporate Financial Performance including in the regression analysis several variables related to some profitability ratios or other accounting-measured indexes (i.e., ROA, ROI, sales growth, ROE, etc.) underestimating the influence of the Intellectual Capital on firm’s performance and value. Hence, it is also essential to investigate the potential linkage between Corporate Social Responsibility and Intellectual Capital performance assessing the effective contribution of intangible resources to the firm’s value creation process (Padgett and Galan, 2010; Surroca et al., 2010; Lòpez-Gamero et al., 2011). Given these premises, our study intends to establish a connection between Corporate Social Responsibility by analyzing Environmental Social and Governance (ESG) issues and firm’s Intellectual Capital performance of a sample of companies operating in the Oil & Gas industry. The ESG data refer to various types of non-financial information (such as carbon emissions, waste disposal, supply chain, human rights, community relations, executive compensation, shareholders’ rights, etc.) and may provide a useful support for risk assessment as part of the operational decisions of the company, to support policies related to compliance with the Human Rights and to guide decisions about the structures of corporate governance. This research is expected to find a positive association between ESG factors and Intellectual Capital’s performance expressed by some well-known measures like VAICTM (Pulic, 1998; 2000, 2004), Tobin’s q, R&D expenditures, and so on.