United Nations Global Compact: Practice what you sign?
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2025-07-07
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en
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This thesis examines whether companies that sign the United Nations Global Compact (UNGC) outperform those that do not on environmental, social, and governance (ESG) indicators aligned with the initiative’s ten principles. Using a panel dataset of firms from the S&P 500 and STOXX Europe 600 between 2019 and 2023, this analysis applies a combination of Ordinary Least Squares (OLS), Two-Way Fixed Effects (TWFE), and within-firm fixed effects regressions focused on "switcher" firms, those that changed their UNGC signatory status during the period.
The OLS results show that UNGC signatories consistently outperform non-signatories on individual principles and on the overall average, indicating that firms already committed to responsible business conduct outperform those who have not. However, the TWFE models reveal that non-signatory firms improved at a faster rate over time, suggesting there is a performance convergence likely driven by external ESG pressures rather than internal commitments. The within-firm fixed effects model of switchers shows modest but significant improvements in ESG performance post-commitment, especially in human rights and labour-related principles.
Overall, the findings suggest that while a UNGC membership is associated with higher baseline ESG performance, being part of the UNGC does not guarantee accelerated improvement. These results contribute to the literature on voluntary sustainability initiatives by distinguishing between cross-sectional performance advantages and actual within-firm change.
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Faculteit der Managementwetenschappen