Firms Human Rights Practices and Resource Use : Impacts on Firms ESG and Financial Performance

AbstractThis study examines the impacts of human rights and resource use on environmental, social and governance (ESG) performance, capital market value, and financial performance of firms listed on the New York Stock Exchange from 2002 to 2021. The data collected from Refinitiv Eikon was analysed using Pooled OLS and Fixed Effects regression models. The results indicate that both human rights and resource use have varied impacts on firms ESG performance. ‘Resource use’ is is found to be positively associated market value and financial performance, which suggests that investors are becoming more aware of the importance of firms' ecological responsibilities. On the other hand, human rights practices were found to be a cost to managers and a disincentive for firms to engage in such practices. The study provides insights into the role of human rights and resource use in firms' ESG performance and highlights the need for public policies to support human rights practices. The findings suggest that firms can reap benefits from resource use efficiency, but there is a need to balance the costs of human rights practices so that firms are not financially disadvantaged for engaging in such practices