Strategic ESG Orientation and Financial Resilience in Emerging Markets
Authors
Article Sidebar
Main Article Content
Abstract
This study introduces a diagnostic ESG orientation typology (Strategic, Transitional, and Compliance) to demonstrate ESG orientation, which represents the extent to which ESG practices are internalized and institutionalized within the organization, beyond an ESG disclosure score. It then seeks to establish the link between ESG orientation and financial resilience within Zambia’s agro-food sector. It thus enables context-specific conclusions beyond generalized ESG disclosure scores for emerging markets. Using an explanatory sequential mixed-methods design, based on a sample of 55 firm-year observations (2014–2024) of five listed agro-food sector firms, the firm-level analysis applies a fixed-effects panel regression of the quantitative sample. The qualitative classification of ESG orientations is guided by a structured coding framework that applies ISO IWA 42:2024 ESG principles when analysing the texts of the firms’ annual reports. Strategic ESG firms (characterized by board sustainability responsibility, long-horizon environmental investments and stakeholder engagement) were financially more resilient (in terms of ROA) than Compliance or Transitional firms. The typology offers explanatory power by connecting depth of ESG integration to profitability trajectories and proves the narrowness of ESG ratings disconnected from strategic framing. This study, unlike extant studies focusing on ESG score levels, conceptualizes ESG as an organizational orientation and proposes an ISO-aligned qualitative classification system that is applicable to emerging markets. This research extends previous studies by providing a typological lens through which the financial materiality of ESG can be understood in weak regulatory environments and thus provide novel diagnostic and policy utility.
Article Details
Copyright (c) 2025 Mubanga Lackson Chipimo, Prof. John Bwalya, Prof. Joseph Katongo Kanyanga
This work is licensed under a Creative Commons Attribution 4.0 International License.
The data that support the findings of this study are available from the corresponding author upon reasonable request
Abdi, Y., Li, X., & Càmara-Turull, X. (2022). Exploring the impact of sustainability (ESG) disclosure on firm value and financial performance (FP) in airline industry: The moderating role of size and age. Environment, Development and Sustainability, 24(4), 5052–5079. DOI: https://doi.org/10.1007/s10668-021-01649-w
Aguinis, H., & Glavas, A. (2019). On corporate social responsibility, sensemaking, and the search for meaningfulness through work. Journal of management, 45(3), 1057-1086. DOI: https://doi.org/10.1177/0149206317691575
Ahmad, R. A. R., Abd Sata, F. H., Azmi, N. A., Zainon, S., & Probohudono, A. N. (2025). Enhancing corporate philanthropy through board competency and financial health: Accelerating progress towards sustainable. Journal of Lifestyle and SDGs Review, 5(1), e03147–e03147. DOI: https://doi.org/10.47172/2965-730X.SDGsReview.v5.n01.pe03147
Amaeshi, K., Adegbite, E., & Rajwani, T. (2016). Corporate social responsibility in challenging and non-enabling institutional contexts: Do institutional voids matter? Journal of business ethics, 134, 135-153. DOI: https://doi.org/10.1007/s10551-014-2420-4
Aouadi, A., & Marsat, S. (2018). Do ESG controversies matter for firm value? Evidence from international data. Journal of business ethics, 151, 1027-1047. DOI: https://doi.org/10.1007/s10551-016-3213-8
Aryati, T., & Susilawati, S. (2025). Exploring the influence of ESG and prosperity disclosure score on financial performance. Economics-Innovative and Economics Research Journal, 13(1). [No page range provided] DOI: https://doi.org/10.2478/eoik-2025-0017
Attarit, T., Sirimathep, P., Petpairote, W., Jiracheewee, J., & Pestunji, C. (2025). The influences of corporate governance on corporate social responsibility and firm performance of the listed companies in Thailand sustainability investment. International Journal of Economics and Financial Issues, 15(1), 238–245. DOI: https://doi.org/10.32479/ijefi.17406
Bahadori, N., Kaymak, T., & Seraj, M. (2021). Environmental, social, and governance factors in emerging markets: The impact on firm performance. Business Strategy & Development, 4(4), 411–422. DOI: https://doi.org/10.1002/bsd2.167
Baumgartner, R. J. (2014). Managing corporate sustainability and CSR: A conceptual framework combining values, strategies and instruments contributing to sustainable development. Corporate Social Responsibility and Environmental Management, 21(5), 258-271. DOI: https://doi.org/10.1002/csr.1336
Belesioti, M., & Glykas, M. (2022). A Holistic CSR Maturity Assessment Model. Recent Advances in Information Technology, Tourism, Economics, Management and Agriculture, 239. DOI: https://doi.org/10.31410/ITEMA.2022.239
Broadstock, D. C., Chan, K., Cheng, L. T., & Wang, X. (2021). The role of ESG performance during times of financial crisis: Evidence from COVID-19 in China. Finance research letters, 38, 101716. DOI: https://doi.org/10.1016/j.frl.2020.101716
Brooks, C., & Oikonomou, I. (2018). The effects of environmental, social and governance disclosures and performance on firm value: A review of the literature in accounting and finance. British Accounting Review, 50(1), 1–15. DOI: https://doi.org/10.1016/j.bar.2017.11.005
Cek, K., & Eyupoglu, S. (2020). Does environmental, social and governance performance influence economic performance? Journal of Business Economics and Management, 21(4), 1165–1184. DOI: https://doi.org/10.3846/jbem.2020.12725
https://doi.org/10.3846/jbem.2020.12725
Chen, S., Song, Y., & Gao, P. (2023). Environmental, social, and governance (ESG) performance and financial outcomes: Analysing the impact of ESG on financial performance. Journal of Environmental Management, 345, 118829. DOI: https://doi.org/10.1016/j.jenvman.2023.118829
Chipimo, M. L., Bwalya, J., & Kanyanga, J. K. (2025). The Role of ESG in Driving Firm Profitability: Implications for Stakeholder, Resource-Based View, and Triple Bottom Line Theories in Emerging Markets. SEISENSE Journal of Management, 8(1), 119-131. https://doi.org/10.33215/m1c78498 DOI: https://doi.org/10.33215/m1c78498
Corvino, A., Doni, F., & Bianchi Martini, S. (2020). Corporate governance, integrated reporting and environmental disclosure: Evidence from the South African context. Sustainability, 12(12), 4820. DOI: https://doi.org/10.3390/su12124820
Creswell, J. W., & Clark, P. V. L. (2017). Designing and conducting mixed methods research (3rd ed.). SAGE Publications.
Deng, X., Kang, J. K., & Low, B. S. (2013). Corporate social responsibility and stakeholder value maximization: Evidence from mergers. Journal of financial Economics, 110(1), 87-109. DOI: https://doi.org/10.1016/j.jfineco.2013.04.014
Dmuchowski, P., Dmuchowski, W., Baczewska-Dąbrowska, A. H., & Gworek, B. (2023). Environmental, social, and governance (ESG) model; impacts and sustainable investment—Global trends and Poland’s perspective. Journal of Environmental Management, 329, 117023. DOI: https://doi.org/10.1016/j.jenvman.2022.117023
Duc, D. A., Hoi, L. Q., Van Dao, L., Lien, V. T. P., Hang, N. T., & Huong, T. L. (2024). Corporate environmental responsibility and the business risk of Vietnamese SMEs: the mediating role of internal control. Risk Management, 26(1), 2. DOI: https://doi.org/10.1057/s41283-023-00133-1
Duque-Grisales, E., & Aguilera-Caracuel, J. (2021). Environmental, social and governance (ESG) scores and financial performance of multilatinas: Moderating effects of geographic international diversification and financial slack. Journal of Business Ethics, 168(2), 315–334. DOI: https://doi.org/10.1007/s10551-019-04177-w
Eccles, R. G., Ioannou, I., & Serafeim, G. (2014). The impact of corporate sustainability on organizational processes and performance. Management Science, 60(11), 2835–2857. DOI: https://doi.org/10.1287/mnsc.2014.1984
https://doi.org/10.1287/mnsc.2014.1984
Elkington, J. (1997). The triple bottom line. Environmental management: Readings and cases, 2, 49-66.
FAO. (2024). Economic and Policy Analysis of Climate Change: Zambia country profile. Accessed on 20 June 2025 from https://www.fao.org/in-action/epic/countries/zmb/en/
Friede, G., Busch, T., & Bassen, A. (2015). ESG and financial performance: Aggregated evidence from more than 2000 empirical studies. Journal of Sustainable Finance & Investment, 5(4), 210–233. DOI: https://doi.org/10.1080/20430795.2015.1118917
Freeman, R. E. (1984). Strategic management: A stakeholder approach. Cambridge University Press.
Furtuna, O. K., & Uykulu, A. Z. (2025). How Do Small and Medium-Sized Enterprises Create Value Through the Integrated Reporting Framework? Empirical Study on Integrity and Driving Factors. SAGE Open, 15(1), 21582440251320751. DOI: https://doi.org/10.1177/21582440251320751
Giannopoulos, G., Kihle Fagernes, R. V., Elmarzouky, M., & Afzal Hossain, K. A. B. M. (2022). The ESG disclosure and the financial performance of Norwegian listed firms. Journal of Risk and Financial Management, 15(6), 237. DOI: https://doi.org/10.3390/jrfm15060237
Głuszek, E. (2018). Dimensions and stages of the CSR maturity. Prace Naukowe Uniwersytetu Ekonomicznego we Wrocławiu, (520), 64-80. DOI: https://doi.org/10.15611/pn.2018.520.06
Goel, P. (2010). Triple bottom line reporting: An analytical approach for corporate sustainability. Journal of Finance, Accounting & Management, 1(1).
Gong, Y., Yan, C., & Ho, K. C. (2021). The effect of managerial ability on corporate social responsibility and firm value in the energy industry. Corporate Social Responsibility and Environmental Management, 28(2), 581–594. DOI: https://doi.org/10.1002/csr.2070
Huang, W., Chen, S., & Nguyen, L. T. (2020). Corporate social responsibility and organizational resilience to COVID-19 crisis: An empirical study of Chinese firms. Sustainability, 12(21), 8970. DOI: https://doi.org/10.3390/su12218970
Iacobucci, D., Schneider, M. J., Popovich, D. L., & Bakamitsos, G. A. (2016). Mean centering helps alleviate “micro” but not “macro” multicollinearity. Behavior Research Methods, 48, 1308–1317. DOI: https://doi.org/10.3758/s13428-015-0624-x
International Organization for Standardization. (2024). IWA 48:2024 – Framework for implementing environmental, social and governance (ESG) principles. ISO. https://www.iso.org/standard/89240.html
Jensen, M. C. (2001). Value maximization, stakeholder theory, and the corporate objective function. Journal of Applied Corporate Finance, 22, 32–42. DOI: https://doi.org/10.1111/j.1745-6622.2010.00259.x
Ko, J., Leung, C. K., Dodoo, A. N., & Agbajor, F. D. (2025). Regional disparities and trends in national ESG performance across Africa: A comparative analysis (1990–2020). Innovation and Green Development, 4(3), 100231. DOI: https://doi.org/10.1016/j.igd.2025.100231
Kogi, S. K., Kristanto, A. B., & Cao, J. (2025). A Systematic Literature Review of Environmental, Social and Governance (ESG) Research in Africa. This paper has been accepted for publication in Meditari Accountancy Research (DOI: 10.1108/MEDAR-08-2024-2623). DOI: https://doi.org/10.1108/MEDAR-08-2024-2623
Kotsantonis, S., Pinney, C., & Serafeim, G. (2016). ESG integration in investment management: Myths and realities. Journal of Applied Corporate Finance, 28(2), 10-16. DOI: https://doi.org/10.1111/jacf.12169
Kumar, A., Roy, D., Tripathi, G., Joshi, P. K., & Adhikari, R. P. (2016). Can contract farming increase farmers’ income and enhance adoption of food safety practices. Evidence from Remote Areas of Nepal, 1524.
Landis, J. R., & Koch, G. G. (1977). The measurement of observer agreement for categorical data. biometrics, 159-174. DOI: https://doi.org/10.2307/2529310
Li, T. T., Wang, K., Sueyoshi, T., & Wang, D. D. (2021). ESG: Research progress and future prospects. Sustainability, 13(21), 11663. DOI: https://doi.org/10.3390/su132111663
Lins, K. V., Servaes, H., & Tamayo, A. (2017). Social capital, trust, and firm performance: The value of corporate social responsibility during the financial crisis. the Journal of Finance, 72(4), 1785-1824. DOI: https://doi.org/10.1111/jofi.12505
Lisin, A., Kushnir, A., Koryakov, A. G., Fomenko, N., & Shchukina, T. (2022). Financial stability in companies with high ESG scores: evidence from North America using the Ohlson O-Score. Sustainability, 14(1), 479. DOI: https://doi.org/10.3390/su14010479
Lupu, I., Hurduzeu, G., & Lupu, R. (2022). How is the ESG reflected in European financial stability?. Sustainability, 14(16), 10287. DOI: https://doi.org/10.3390/su141610287
Ma’in, M., Asmuni, S., Junos, S., Rostam, S. N., Azmi, N. H. A., & Sahidza, K. R. (2022). Impact of environmental, social, and governance (ESG), profitability and macroeconomics indicators on firm performance. Journal of Entrepreneurship, Business and Economics, 10(2), 1–17.
Manhiça, A. J. (2023). Environmental, Social, and Governance (ESG) Status in Sub-Saharan Africa: Status and Required Conditions for Firm Engagement. The Competitiveness of Nations 2: Government Policies and Business Strategies for Environmental, Social, and Governance (ESG), 313-331. DOI: https://doi.org/10.1142/9789811268090_0014
Manrique, S., & Martí-Ballester, C. P. (2017). Analysing the effect of corporate environmental performance on corporate financial performance in developed and developing countries. Sustainability, 9(11), 1957. DOI: https://doi.org/10.3390/su9111957
Masongweni, V. V., & Simo-Kengne, B. D. (2024). The impact of sustainable investment on firm performance in South Africa. South African Journal of Accounting Research, 38(2), 146-173. DOI: https://doi.org/10.1080/10291954.2024.2306701
Mathis, S. (2023). Environmental, social and governance (ESG). TechTarget Network.
https://www.techtarget.com/whatis/definition/environmental-social-and-governance-ESG
Marquis, C., & Raynard, M. (2015). Institutional strategies in emerging markets. Academy of Management Annals, 9(1), 291-335. DOI: https://doi.org/10.5465/19416520.2015.1014661
Matos, P. (2020). ESG and responsible institutional investing around the world: A critical review. DOI: https://doi.org/10.2139/ssrn.3668998
Mulenga, B. P., Wineman, A., & Sitko, N. J. (2017). Climate trends and farmers’ perceptions of climate change in Zambia. Environmental management, 59(2), 291-306. DOI: https://doi.org/10.1007/s00267-016-0780-5
Odubote, I. K. (2022). Characterization of production systems and management practices of the cattle population in Zambia. Tropical Animal Health and Production, 54(4), 216. DOI: https://doi.org/10.1007/s11250-022-03213-8
Ogolime, D., & Ibrahim, A. (2024). Effect of Environmental, Social, and Governance (ESG) Issues on Shareholders' Value among Manufacturing Companies in Sub-Saharan Africa. ANUK College of Private Sector Accounting Journal, 1(1), 224-231.
Onwere, H. I. (2024). Does Environment, Social and Governance Practices Improve Firm Value in Sub Sahara Africa?. African Development Finance Journal, 7(1), 24-43.
Piwowar-Sulej, K., Rojek-Nowosielska, M., Sokołowska-Durkalec, A., & Markowska-Przybyła, U. (2022). Maturity of CSR Implementation at the Organizational Level—From Literature Review to a Comprehensive Model. Sustainability, 14(24), 16492. DOI: https://doi.org/10.3390/su142416492
Pérez Estébanez, R., & Sevillano Martín, F. J. (2025). Business sustainability and its effect on performance measures: A comprehensive analysis. Sustainability, 17(1), 297. DOI: https://doi.org/10.3390/su17010297
Phiri, J., Malec, K., Majune, S. K., Appiah-Kubi, S. N. K., Gebeltová, Z., Maitah, M., Maitah, K., & Abdullahi, K. T. (2020). Agriculture as a determinant of Zambian economic sustainability. Sustainability, 12(11), 4559. DOI: https://doi.org/10.3390/su12114559
Porter, M. E., & Kramer, M. R. (2011). How to reinvent capitalism—and unleash a wave of innovation and growth. Manag Sustain Bus, 323.
Shaikh, I. (2022). Environmental, social, and governance (ESG) practice and firm performance: International evidence. Journal of Business Economics and Management, 23(1), 218–237. DOI: https://doi.org/10.3846/jbem.2022.16202
Sitko, N. J., & Jayne, T. S. (2014). Exploitative briefcase businessmen, parasites, and other myths and legends: assembly traders and the performance of maize markets in eastern and southern Africa. World development, 54, 56-67. DOI: https://doi.org/10.1016/j.worlddev.2013.07.008
Sroufe, R. (2017). Integration and organizational change towards sustainability. Journal of Cleaner Production, 162, 315–329. https://doi.org/10.1016/j.jclepro.2017.06.224 DOI: https://doi.org/10.1016/j.jclepro.2017.05.180
Su, R., Liu, C., & Teng, W. (2020). The heterogeneous effects of CSR dimensions on financial performance – A new approach for CSR measurement. Journal of Business Economics and Management, 21(4), 987–1009. https://doi.org/10.3846/jbem.2020.12394 DOI: https://doi.org/10.3846/jbem.2020.12394
Teti, E., & Spiga, L. (2023). The effect of environmental, social and governance score on operating performance after mergers and acquisitions. Business Strategy and the Environment, 32(6), 3165–3177. DOI: https://doi.org/10.1002/bse.3293
Van Huong, V., Mai, Y., Hau, B. D., Cuong, L. K., & Van Dao, L. (2023). Do firm characteristics in their local context promote corporate ecological and social responsibility? Evidence from a multi-hierarchical analysis. International Review of Economics & Finance, 85, 722-743. DOI: https://doi.org/10.1016/j.iref.2023.02.008
Velte, P. (2021). Environmental performance, carbon performance and earnings management: Empirical evidence for the European capital market. Corporate Social Responsibility and Environmental Management, 28(1), 42–53. DOI: https://doi.org/10.1002/csr.2030
Vuong, N. B. (2022). Investor sentiment, corporate social responsibility, and financial performance: Evidence from Japanese companies. Borsa Istanbul Review, 22(5), 911–924. DOI: https://doi.org/10.1016/j.bir.2022.06.010
Wang, Z., Zhang, J., & Ullah, H. (2023). Exploring the multidimensional perspective of retail investors’ attention: The mediating influence of corporate governance and information disclosure on corporate environmental performance in China. Sustainability, 15(15), 11818. https://doi.org/10.3390/su151511818 DOI: https://doi.org/10.3390/su151511818
Westerholz, H. K., & Höhler, J. (2022). Corporate social responsibility reporting in the food industry—Comparison of co‐operatives and investor‐owned dairies. Corporate Social Responsibility and Environmental Management, 29(1), 211–222. DOI: https://doi.org/10.1002/csr.2197
Yawika, M. K., & Handayani, S. (2019). The effect of ESG performance on economic performance in the high-profile industry in Indonesia. Journal of International Business and Economics, 7(2), 112–121. DOI: https://doi.org/10.15640/jibe.v7n2a12
Zhao, C., Guo, Y., Yuan, J., Wu, M., Li, D., Zhou, Y., & Kang, J. (2018). ESG and corporate financial performance: Empirical evidence from China’s listed power generation companies. Sustainability, 10(8), 2607. DOI: https://doi.org/10.3390/su10082607