Journal of Cleaner Production 310 (2021) 127380

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Journal of Cleaner Production

journal homepage: www.elsevier.com/locate/jclepro

Do corporate social responsibility practices improve financial performance?

A case study of airline companies
Tsai-Chi Kuo a, b, Hsiao-Min Chen c, *, Hsien-Mi Meng d, e, f
a
Department of Industrial Management, National Taiwan University of Science and Technology, No.43, Sec.4, Keelung Rd., Taipei, 106335, Taiwan
b
Artificial Intelligence for Operations Management Research Center, National Taiwan University of Science and Technology, Taipei, 106335, Taiwan
c
Department of Marketing and Logistics Management, Chihlee University of Technology, Taipei, 220305, Taiwan
d
Manufacturing Business Unit, Gigabyte Technology Co.,Ltd., Taoyuan, 324039, Taiwan
e
Department of Industrial and Systems Engineering, Chung Yuan Christian University, Taoyuan, 320314, Taiwan
f
Department of Industrial Engineering and Enterprise Information, Tunghai University, Taichung, 407224, Taiwan

A R T I C L E I N F O A B S T R A C T

Handling Editor: Zhifu Mi With the growing emphasis on corporate social responsibility (CSR) practices, airlines are beginning to question
whether the implementation of CSR activities will increase costs or affect corporate financial performance. Some
Keywords: researchers argue that CSR is positively associated with corporate financial performance, while others oppose
Corporate social responsibility this view. This study tracked the environmental, social, and governance (ESG) performance indicators and the
Financial performance
short-term financial performance of 30 airlines worldwide for five years with data from the Thomson Reuters
ESG performance Indicators
Eikon ESG database. A multilevel quadratic growth model was used to investigate the impact of airlines’
Ownership
Multilevel quadratic growth model disclosure of ESG performance indicators. The results revealed that in the initial stages of implementation of ESG-
based practices, airlines demonstrate a downward trend in return on assets. However, it gradually increases after
a period of incorporation and implementation. Based on this result, airlines should prioritize the selection of key
performance indicators for the implementation of CSR toward sustainability.

1. Introduction This problem impacts the willingness of airlines to conduct CSR

based on financial performance, including the company’s shareholders,
Globally, commercial aviation produced 915 Mt of carbon dioxide thus directly affecting its CSR disclosure strategies. However, this issue
(CO2) emissions in 2019. The International Air Transport Association is under-researched. Kao et al. (2018) stated that companies with
(IATA, 2018) has committed to capping carbon emissions growth, different types of ownership have different motivations for participating
starting in 2020, and envisages a 50% reduction in CO2 emissions by in CSR; hence, it is vital to consider the type of ownership when
2050. In controlling CO2 emissions, IATA and its members have recon­ assessing CSR. Ownership could be classified as private ownership,
firmed their commitment to the environment. Combating climate public ownership, or mixed ownership. The greater the ownership
change remains a top priority. This issue not only affects airlines and proportion, the more the control power.
their stakeholders but also the economic development of their supply Henceforth, stock exchanges in various countries and the Dow Jones
chain partners and other affiliated industries. Furthermore, it has a Sustainability Indices (DJSI, 2017) will also encourage the inclusion of
cascading effect on the global economy, society, and the environment. ESG disclosures as part of the CSR disclosure initiative. KPMG’s (2017)
Environmental, social, and governance (ESG) performance has Survey of Corporate Responsibility Reporting revealed that 75% of G250
become an important sustainable development strategy influencing the companies and 63% of N100 companies employed the Global Reporting
overall performance of companies (Eccles et al., 2013). Many airlines Initiative (GRI) framework for sustainable development reporting and
are beginning to investigate CSR activities. Especially airlines with high disclosing ESG-related information. In recent years, scholars have
capital intensity and high external debt are now seriously concerned adopted ESG performance indicators to measure the impact of CSR on
about the impacts of CSR implementation on corporate financial financial performance (Hillman and Keim, 2001; Johnson and Greening,
performance. 1999; Li et al., 2018).

* Corresponding author.
E-mail addresses: [email protected] (T.-C. Kuo), [email protected] (H.-M. Chen).

https://doi.org/10.1016/j.jclepro.2021.127380
Received 11 June 2020; Received in revised form 10 April 2021; Accepted 1 May 2021
Available online 15 May 2021
0959-6526/© 2021 Elsevier Ltd. All rights reserved.
T.-C. Kuo et al. Journal of Cleaner Production 310 (2021) 127380

Some scholars have studied the impact of ownership type, partici­ requirement for sustainable firm performance in the current environ­
pation in CSR activities, and airline ownership type on corporate ment; however, this can only be achieved where the approach is
financial performance. However, no study has been conducted on the embedded in the core business, by CSR leaders who can apply the
effect of ownership type on the relationship between ESG performance concepts of value creation through a strong CSR culture (Phillips et al.,
indicators and short-term corporate financial performance. 2019; Yang and Baasandorj, 2017).
The promotion and implementation of CSR has become a form of
competitive advantage for companies and a point of consideration for 2.2. Environmental, social, and governance performance
investors. Although airlines have implemented CSR, the magnitude of
implementation is low compared to other industries. In addition, airlines Husted and Sousa-Filho (2017) defined ESG performance as follows:
are currently facing the problem of how to select the best CSR indicators (1) Environmental performance refers to the adoption of policies and
to prioritize implementation, keeping in mind the pressure of operating investments that are good for the environment, such as the imple­
costs, corporate image, reputation, and profitability. mentation of pollution control measures. (2) Social performance refers
To answer the research question of whether the implementation of to internal social policies related to internal and external stakeholders,
CSR affects enterprises positively or negatively, this study used the such as community investments, equal employment opportunities, and
disclosure of ESG performance indicators as the standard for CSR job safety. (3) Governance performance refers to the use of good
disclosure by companies, to measure their impact on the short-term corporate governance practices, such as the separation of the roles of the
financial performance of airlines. This study tracked the environ­ CEO and chairman of the board and having diverse board members to
mental, social, and governance (ESG) performance indicators and the ensure that corporate decisions are made in the interests of share­
short-term financial performance of 30 airline companies worldwide for holders. Each pillar contains three to four indicators, which further
five years, with data from the Thomson Reuters EIKON ESG database. A contain several micro-level issues. For example, “Resource Use” under
multilevel quadratic growth model was used to investigate the impact of environmental performance contains multiple issues such as resource
airlines’ disclosure of ESG performance indicators. Furthermore, a reduction, water efficiency, energy efficiency, environmental supply
multilevel empirical study of the prerequisites of CSR disclosure has chain, and environment management team policies, which are assigned
been verified as “the first knowledge gap” in CSR research (Karassin and weights. Resource use is weighted at 11%, whereas “workforce” under
Bar-Haim, 2016). It is found that the financial performance of airlines is social performance is weighted at 16%. The count of measures per
affected by ownership type, which is associated with the “corporate category determines the weight of the respective category. Detailed
institutional level” problem. In other words, more accurate inferences counts and weights are provided in Appendix B.
can be obtained by establishing a research framework and model based As an important aspect of non-financial information, ESG disclosure
on a multilevel approach. Finally, this study also developed solutions for helps internal and external stakeholders understand a company’s oper­
the implementation of CSR key performance indicators (KPIs) suitable ations (van Duuren et al., 2016), thereby reducing information asym­
for airlines with different ownership types. metry. Li et al. (2018) stated that when the disclosure of ESG
The remainder of this paper is organized as follows. In Section 2, performance indicators is transparent and accurate, investors can make
literature on CSR and ESG performance, airline type of ownership, and more informed decisions. Therefore, ESG disclosure creates a positive
the multilevel approach are reviewed. Section 3 presents the method­ feedback loop. By improving the transparency in ESG disclosures,
ology, and Section 4 develops the case study and analysis. Section 5 company managers can improve internal management mechanisms and
concludes and provides future research directions. comply with regulations to enhance stakeholder interests (Cheng et al.,
2014).
2. Literature review ESG performance has recently become an important sustainable
development strategy that influences the overall performance of com­
2.1. CSR and financial performance panies (Eccles et al., 2013). ESG performance is also widely used in CSR
research to measure its impact on financial performance (Hillman and
CSR has become an important tool for companies worldwide to Keim, 2001; Johnson and Greening, 1999; Li et al., 2018). Furthermore,
communicate with their stakeholders, improve their corporate image, ESG performance justifies the idea of sustainable development (Nunes
and enhance competitive advantage. Elkington (1997), an authority in et al., 2016; Ortas et al., 2015; Rahdari and Anvary Rostamy, 2015). This
the CSR field, proposed a new concept known as the “triple bottom line.” study found that ESG performance is a necessary measure, and a per­
Based on this idea, not only should companies be thinking about how to formance indicator of CSR, as well as a cornerstone for the sustainable
maximize profits, but they must also adhere to the principles of the triple development of companies.
bottom line which includes corporate earnings, social responsibility, and Scholars have also begun to study the correlation between ESG
environmental responsibility. Du and Vieira (2012) defined CSR as a performance and corporate financial performance. For instance, ac­
company’s commitment to maximizing long-term economic, social, and cording to Friede et al. (2015), 90% of empirical studies found that ESG
environmental well-being through operations, policies, and resources. performance has a non-negative relationship with corporate financial
Meanwhile, Jaakson et al. (2009) and Reverte et al. (2016) defined CSR performance, and that the positive impact of ESG performance on
as integrating the economic, social, and environmental elements of CSR corporate financial performance will gradually stabilize over time.
into the interactions between company operations and their Other related studies are shown in Table 1.
stakeholders.
As the idea of CSR gradually developed and matured, governments 2.3. Type of ownership for airlines
and companies discovered that it could be used to implement sustain­
able development plans for the planet. Bansal (2005), EC (2002) and Franchising is becoming increasingly important in the airline in­
Moneva et al. (2007) argued that CSR can be viewed as a company’s dustry. In the early days, airlines were state-owned. Driven by the eco­
contribution to sustainable development. Therefore, this study defined nomic liberalization of the global aviation industry over the past 40
CSR as the specific practice of sustainable development and adherence years, foreign-owned or private airlines, and those with mixed-
to the principles of the triple bottom line, namely the environment, ownership (i.e., a mixture of state and private ownership), have
economy, and society, to fulfill social responsibility and create sustain­ become common. According to the European Union (EU) regulations,
able revenue for company employees and relevant stakeholders. majority ownership is defined as the holding of more than 50% of capital
The relationship between CSR and corporate financial performance in an airline company, while non-EU member nations can invest and
is relatively strong. Several researchers indicated that there is a strong hold no more than 49.5%. In 1992, the United States began allowing

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T.-C. Kuo et al. Journal of Cleaner Production 310 (2021) 127380

Table 1
Studies on the impact of ESG disclosure during the implementation of CSR by companies on corporate financial performance.
Scholars Research Findings ESG Database

Nollet et al. (2016) 1. In a linear model, ESG performance indicators have no significant relationship with financial performance. Bloomberg
2. In a non-linear model, overall ESG score and governance performance indicators have a U-shaped relationship with financial
performance, while governance is a key factor affecting CSR and financial performance.
Yang and Baasandorj 1. Full-service airline companies improve financial performance through CSR activities related to environmental and social Thomson Retuers
(2017) performance indicators. ASSET4 ESG
2. Low-cost airline companies improve financial performance through large firm size and CSR activities related to
environmental performance indicators.
Garcia et al. (2017) The profitability of companies investing in emerging countries is not related to overall ESG performance, social performance, Thomson Retuers
and governance performance but has a negative relationship with environmental performance. EIKON
Wang and Sarkis In CSR, the implementation strategy for governance performance indicators has a positive relationship with environmental Bloomberg
(2017) performance indicators, social performance indicators, and corporate financial performance.
Li et al. (2018) The level of ESG disclosure has a positive relationship with corporate value. Bloomberg and Boardex

foreign ownership of airlines by adjusting the original ceiling from 25% developed a comprehensive multilevel model comprising the main
to 49% to establish the same regulations as the EU. This has helped in the drivers of corporate environmental responsibility (CER) as a measure of
negotiation of the US–EU Open Skies Agreement. By compiling the CSR. This multilevel model can assess the importance of each aspect in
aviation regulations of 121 countries, Walulik (2016) defined ownership achieving CER and the importance of each component at each level.
as more than 50%, of the shares of an airline company. This is also After reviewing the literature on CSR, including 588 journals and
known as substantial ownership (i.e., ownership with considerable 102 books, Aguinis and Glavas (2012) proposed a multilevel and
weight). multidisciplinary theoretical framework combining literature at the
Based on these studies, the present study classified airlines by institutional, organizational, and individual levels. Based on their study,
ownership type: (1) State-owned enterprises, with the state holding scholars often use institutional theory as a conceptual background, with
more than 50% share; (2) Private enterprises, with substantial private factors related to customers and external stakeholders. At the organi­
ownership holding more than 50% share; (3) Mixed-ownership enter­ zational level, scholars adopted different theoretical frameworks, such
prises, where state-owned and private (or foreign) enterprises hold no as the resource-based view (RBV) of companies. At the individual level,
more than 49.5% share each. scholars also adopted different theoretical frameworks such as organi­
Ownership type has an important effect on corporate governance and zational justice and social impact.
financial performance (Shleifer and Vishny, 1997; Thomsen and Ped­ Scholars at the institutional level like Croon and Veldhoven (2007)
ersen, 2000). and Estrin et al. (2016) used certain institutional conditions, including
Scholars have also studied the impact of different ownership types on rules, monitoring, norms, and stakeholder dialogue, as moderators.
corporate financial performance. Abramov et al. (2017) and Bank Barney (1991) argued that RBV is a theory of corporate management,
(2014) pointed out that a performance gap exists between state-owned where the heterogeneity and immobility of corporate resources are
enterprises and private enterprises. State-owned enterprises perform possible sources of competitive advantage. They also argue that per­
poorly in terms of efficiency and financial performance compared to formance depends on the implementation of strategies that leverage a
privately owned companies. Barnea and Rubin (2010) and Zhang et al. company’s internal strengths to respond to external opportunities. In a
(2015) stated that the participation of private enterprises in CSR can wider context, resources are assets that companies can use to achieve
improve corporate social performance and environmental standards as goals or serve as critical success factors (Bryson et al., 2007). Resources
well as enhance corporate reputation. Kao et al. (2018) and Wang et al. can be both basic and higher-order (Madhavaram and Hunt, 2008).
(2018) revealed that the participation of state-owned enterprises in CSR Higher-order resources generally comprise of basic resources, which are
has a negative impact on corporate financial performance, while the a combination of tangible and intangible resources. These resources are
participation of private enterprises in CSR has a positive impact. While combined for organizations to achieve their goals (Barrutia and Eche­
studying international airlines, Backx et al. (2002) found that barria, 2015). Skills can also be classified as a type of resource (Evans
state-owned airlines demonstrate poorer financial performance than et al., 2006). Therefore, skills are represented as part of the resources
private airlines. Mixed-ownership airlines, however, perform better and comprise actions, technologies, or processes that help companies
financially than state-owned airlines and worse than private airlines. achieve important organizational goals or serve as critical success fac­
Chen et al. (2017) found that in China, airlines, either state-owned or tors (Bryson et al., 2007).
private, demonstrate better financial performance than At the organizational level, Ullmann (1985) used CSR disclosure as
mixed-ownership airlines. an independent variable. In addition, Arya and Zhang (2009), Brammer
Kao et al. (2018) found that companies with different types of and Millington (2008), and Hillman and Keim (2001) used financial
ownership have different motivations for participating in CSR. Hence, it performance indicators as dependent variables. Meanwhile, Brammer
is vital to consider ownership type when assessing CSR. et al. (2009) and Godfrey et al. (2009) used firm size as a moderator.
Based on the aforementioned review and compilation of multilevel
2.4. A multilevel concept CSR literature by Aguinis and Glavas (2012), this study divided its
research framework into corporate institutional and corporate organi­
Lin and Peng (2006) stated that the multilevel nature of organiza­ zational levels. At the corporate organizational level, the independent
tions is often neglected in empirical studies, while the analysis of sin­ variables are ESG performance indicators, the dependent variables are
gular aspects continues. This can easily blur inferences and result in an financial performance indicators, and the control variables are firm size
incorrect understanding of the phenomenon. In their multilevel empir­ and financial performance indicators. At the corporate institutional
ical study, Karassin and Bar-Haim (2016) have verified the prerequisites level, the type of ownership is the moderator.
for CSR disclosure, which is a knowledge gap and challenge in the study Considering the findings of previous studies, this study found that:
of CSR. However, studies rarely view CSR disclosure from a multilevel (1) ESG performance is a necessary measure and performance indicator
perspective (Aguinis and Glavas, 2012). A few scholars have also of CSR and a cornerstone for the sustainable development of companies.
established multilevel models to investigate the relationship between (2) Some scholars have studied the impact of ownership type, partici­
multiple levels and CSR. For example, Karassin and Bar-Haim (2016) pation in CSR activities, or airline ownership type on corporate financial

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T.-C. Kuo et al. Journal of Cleaner Production 310 (2021) 127380

performance. However, no study has been conducted on the effect of between the corporate-institutional and corporate-organizational levels.
ownership type on the relationship between ESG performance indicators Using return on assets (ROA) as the variable representing short-term
and short-term corporate financial performance. Therefore, this study corporate financial performance, a multilevel model was developed to
developed a sequence of ESG performance indicator disclosure stan­ analyze the relationship between ESG disclosure during the imple­
dards for airlines. This provides a basis for practical application and mentation of CSR and short-term financial performance at the
improvement of CSR for airlines. corporate-organizational level. Then, we determined the effect of
different ownership types on this relationship, to varied extents, at the
2.5. Summary of the literature review corporate institutional level.

The literature review on CSR and financial performance, environ­ 3.2. Research hypotheses
mental, social and governance performance, type of ownership for air­
lines, and the multilevel concept revealed that the relationship of The following hypotheses were proposed:
airlines’ CSR and financial performance is affected by type of ownership.
This is because ownership type will, in turn, affect CSR leadership and Hypothesis H1. The implementation of ESG performance indicators
culture, indicating that this is a multilevel problem. by airlines has a significant relationship with ROA.
Hypothesis H1a. : The implementation of environmental perfor­
3. Research methods mance indicators by airlines has a significant relationship with ROA.
Hypothesis H1b. : The implementation of social performance in­
First, this study’s research framework was established using a
dicators by airlines has a significant relationship with ROA.
multilevel concept approach, and thus, a multilevel quadratic growth
model was developed. Second, variables and short-term financial per­ Hypothesis H1c. : The implementation of governance performance
formances were analyzed using SPSS 24.0 and Mplus 8.3 statistical indicators by airlines has a significant relationship with ROA.
software. Based on the research results, the disclosures of ESG perfor­
Hypothesis H2. The ownership type of airlines has a significant
mance indicators by airlines with differing ownerships, and exhibiting
moderating effect on the relationship between ESG performance in­
the best short-term financial performance were analyzed to develop the
dicators and ROA.
sequence of ESG performance indicator disclosure standards for airlines.
Hypothesis H2-1a. : State-ownership (in airlines) has a moderating
3.1. Multilevel practical and theoretical framework effect on the relationship between environmental performance in­
dicators and ROA.
The literature review revealed that ESG disclosure during the
Hypothesis H2-1b. : State-ownership (in airlines) has a moderating
implementation of CSR has a certain impact on corporate financial
effect on the relationship between social performance indicators and
performance. However, the implementation of CSR by companies of
ROA.
different ownership types has a different effect on corporate financial
performance. Hypothesis H2-1c. : State-ownership (in airlines) has a moderating
The short-term financial performance of airlines is affected by effect on the relationship between governance performance indicators
ownership type. These factors are associated with problems at the and ROA.
corporate institutional level. The structure of the sample data obtained
Hypothesis H2-2a. : Private-ownership (in airlines) has a moderating
have the characteristics of “embeddedness or nesting.” Therefore, this
effect on the relationship between environmental performance in­
study established a research framework using the multilevel approach
dicators and ROA.
proposed by Aguinis and Glavas (2012). Fig. 1 shows the practical and
theoretical framework of this study. A nested structure was established Hypothesis H2-2b. : Private-ownership (in airlines) has a moderating

Fig. 1. This practical and theoretical

framework.
Note: This practical and theoretical frame­
work shows the relationship between the
implementation of ESG performance in­
dicators by airline companies and the ROA,
with airline ownership type as the moder­
ator (Hypotheses H1 to H3). SOEs are state-
owned enterprises; PEs are private enter­
prises; SIZE is firm size; LEV is the leverage
ratio; and ROA is return on assets.

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T.-C. Kuo et al. Journal of Cleaner Production 310 (2021) 127380

effect on the relationship between social performance indicators and 2019; Wang and Sarkis, 2017; Yang and Baasandorj, 2017).
ROA.
3.4. Multilevel quadratic growth model
Hypothesis H2-2c. : Private-ownership (in airlines) has a moderating
effect on the relationship between governance performance indicators
Since ESG performance (independent variable) and short-term
and ROA.
financial performance (dependent variable) are longitudinal data with
Hypothesis H3. The ownership type of airlines has a significant time series that will change over time, the trend of overall data can be
impact on ROA. obtained by detecting the presence of extreme data points. Subse­
quently, one can determine whether the relationships between variables
Hypothesis H3-1. : State-ownership (in airlines) has a significant
support the hypotheses or whether other information can be gained.
impact on ROA.
These data can be used as a reference for setting data models (Chiou,
Hypothesis H3-2. : Private-ownership (in airlines) has a significant 2017). Thus, multilevel linear growth models should be developed.
impact on ROA. However, for linear growth models, the impact of ESG performance
on short-term financial performance over time should be analyzed by
using a linear equation to fit the data. This indicates that ESG perfor­
3.3. Data collection mance should also proportionately increase with time but that short-
term financial performance does not necessarily grow linearly. Garcia
This study selected 30 airlines with ESG performance indicators, out et al. (2017) and Nollet et al. (2016) proved that there is a non-linear
of 112 on the Thomson Reuters EIKON database, as research samples, relationship between the institutional risk of a company (where the
with data spanning a period of five years. The total sample size was 150. operating ability of a company is affected by overall economic behavior)
This study used ESG performance indicator data from 2012 to 2016 and and ESG performance. In other words, there is a non-linear relationship
short-term corporate financial performance data from 2013 to 2017 between ESG performance and corporate financial performance, in
(Appendix A and B). addition to a non-linear relationship with the control variables that
The ESG performance rating framework provided by the Thomson belong to financial performance.
Reuters database was classified by individual ESG performance in­ Based on the above, we could find that the independent and
dicators. Environmental performance indicators were divided into three dependent variables in this study have the characteristics of time series
categories: resource use, emissions, and innovation. These were sub­ data and non-linear relationships. Hence, this study developed a
divided into 61 rating indicators. Social performance indicators were multilevel quadratic growth model based on the one proposed by Chiou
divided into four categories, namely: labor force, human rights, com­ (2017).
munity, and product responsibility, which were then subdivided into 63
rating indicators. Governance performance indicators were divided into 3.5. Definition of variable symbols
three categories: management, shareholders, and CSR strategies, which
were then subdivided into 54 rating indicators. The score for each in­ Table 2 shows the variable symbols to be used in this study. The
dicator ranged from 0 to 1, with a total of 12 possible score levels symbols are defined as follows.
ranging from A+ to D–.
Galant and Cadez (2017) reviewed the relevant CSR and corporate 4. Analysis of empirical results
financial performance literature and found that corporate financial
performance measurement approaches include accounting-based mea­ 4.1. Intra-class correlation coefficient test
sures (i.e., ROA, return on equity, return on capital employed, return on
sales, net operating income, net income, and the Zmijewski score); Before conducting an analysis of the multilevel quadratic growth
market-based measures (i.e., stock returns, market value of a company, model, an intra-class coefficient (ICC) test was performed on the inde­
and change in stock returns); and combined measures (i.e., Tobin’s Q pendent variable, ROA. The ICC of ROA was 0.464 (Table 3). This is
and market value add). Accounting-based measures are available for all greater than the criteria recommended by Normally, ICC values must be
companies and are reasonably comparable. This study selected the ROA greater than 0.12. This indicates that inter-airline variance is high and
as a firm’s asset utilization and operational efficiency-based measure­ that multilevel model analysis should be conducted.
ment, to indicate ESG performance indicators’ relationship with finan­
cial performance. Eq. (1) presents the ROA calculation formula, where 4.2. Analysis of the multilevel quadratic growth model
net profit is divided by total assets:
NET ​ profit 4.2.1. Quadratic growth model setting
ROA = ∗100% (1) In this study, a quadratic curve estimation model was developed
total ​ assets
Guenster et al. (2011), Li et al. (2018), Wang and Sarkis (2017) and
Table 3
Yang and Baasandorj (2017) studied the impact of CSR performance on
ICC of ROA and gross profit.
corporate financial performance using the ROA as a test variable. This
study used ROA as an indicator to measure short-term corporate finan­ Variable ICC
cial performance. In addition, this study also used leverage ratio (LEV), ROA 0.464
asset turnover, and firm size as control variables (López González et al.,

Table 2
Definition of variable symbols in this study.
Variable Category Symbols Variable Definition Variable Category Symbols Variable Definition

Independent Variables ENV Environmental Moderator Variables OS Ownership

SOC Social SOEs State-Owned Enterprises
GOV Governance PEs Private Enterprises
Control Variables SIZE Firm Size Control Variables LEV LEV
ATURN Asset Turnover Dependent Variable ROA Return on Asset

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Table 4
+β50 GOVt− + β60 SIZEti + β70 ATURNti + β80 ATURNti2 + β90 LEVti
Quadratic model fitting and variance analysis for the relationship of ROA with
1i

ESG performance indicators and control variables. + β100 LEVti2 + β01 SOEsi + β02 PEsi + +β11 ENVt− 1i SOEsi + β12 ENVt− 1i PEsi
2 + +β21 ENVt−2 1i SOEsi + β22 ENVt−2 1i PEsi + +β31 SOCt− 1i SOEsi
Variable R F-value P-value

Independent Variables + β32 SOCt− 1i PEsi + β41 SOCt−2 1i SOEsi + β42 SOCt−2 1i PEsi
Environmental 0.052 5.081 0.007** [
Social 0.059 5.693 0.004**
+ β51 GOVt− 1i SOEsi + β52 GOVt− 1i PEsi + μ0i + μ1i ENVt− 1i + μ2i ENVt−2 1i
]
Governance 0.015 2.110 0.125 + μ3i SOCt− 1i + μ4i SOCt−2 1i + μ5i GOVt− 1i + εti
Control Variables
SIZE 0.023 2.770 0.066
(14)
Asset Turnover 0.038 3.918 0.022*
LEV 0.115 10.688 0.000***

Note.∗ρ < 0.05 **ρ < 0.01 ***ρ < 0.001

using statistical software SPSS 24.0 to understand the non-linear rela­

tionship between ROA, ESG performance, and the control variables. The

[ ]
2
most suitable variables were selected to perform the quadratic growth ⎡μ ⎤ ⎡⎛ ⎞⎤ τ00
0
estimation to construct an optimal multilevel non-linear model. The 0i
⎢⎜ 0
2
⎟⎥ τ01 τ11
⎢ μ1i ⎥
results of the quadratic curve estimation model analysis are described as ⎢μ ⎥ ⎢ ⎜
⎜0
⎟⎥
⎢ 2i ⎥ ∼ N⎢ ⎟⎥ τ02 τ12 τ2
follows. ⎢ μ3i
⎣
⎥
⎦
⎢⎜ 0
⎢⎜
⎟⎥ 22
⎟⎥ τ03 τ13 τ23 τ233
⎣⎝ 0 ⎠⎦
The significance of the post-quadratic model F-values for the inde­ μ4i τ2
τ04 τ14 τ24 τ34 44 2
pendent variables of environmental and social performance indicators, μ5i 0 τ τ
after curve estimation, was less than 0.01 (Table 4). Among the control
τ05 τ15 τ25 τ35 45 55
variables, the significance of F-values for asset turnover and LEV was
less than 0.05. Therefore, to construct an optimal model of ESG per­
formance indicators’ effects on corporate financial performance, this
study performed quadratic growth estimation on four variables: envi­
ronmental performance indicators, social performance indicators, asset
turnover, and LEV.

4.2.2. Construction of the multilevel quadratic growth model

After obtaining the most suitable variables for quadratic growth
(Table 4), this study developed a multilevel quadratic growth model,
4.2.3. Analysis of the multilevel quadratic growth model
comprising ESG performance, ROA, and ownership. The model is con­
In this study, Bayesian estimation was used to analyze the multilevel
structed as follows:
quadratic growth model. The related results are explained as follows.
L1 ​ ROAn = π0i + π1i ENVt− 1i + π2i ENVt−2 1i + π 3i SOCt− 1i + π4i SOCt−2 At the corporate institutional level, the ownership of airlines can
1i
2 explain the average value of ROA. Ownership type had a positive impact
+ π 5i GOVt− + π6i SIZEti + π 7i ATURNti + π 8i ATURNti + +π9i LEVti
1i
on ROA, where the average ROA of state-owned airlines was 0.686 times
+ π 10i LEVti2 + εti (2) higher than that of non-state-owned airlines (Table 5). The average ROA
of private airlines was also 0.724 higher than that of non-private air­
L2 π0i = β00 + β01 SOEsi + β02 PEsi + μ0i (3) lines. This shows that both state-owned and private airlines demon­
strated better short-term corporate financial performance than mixed-
π1i = β10 + β11 SOEsi + β12 PEsi + μ1i (4) ownership airlines, with private airlines demonstrating the best finan­
cial performance, followed by state-owned airlines.
π2i = β20 + β21 SOEsi + β22 PEsi + μ2i (5)
This study found that type of ownership had a significant moderating
effect on the impact of ESG performance indicators on an airline’s ROA.
π3i = β30 + β31 SOEsi + β32 PEsi + μ3i (6)
In the presence of ownership type, the first-order coefficients of
π4i = β40 + β41 SOEsi + β42 PEsi + μ4i (7) environmental and social performance indicators were significant and
negative, whilst the second-order coefficients of environmental and so­
π5i = β50 + β51 SOEsi + β52 PEsi + μ5i (8) cial performance indicators were significant and positive. This indicates
that minimum points (with minimum values) were present in the non-
π6i = β60 (9) linear relationship between the moderating effect and ROA. Thus,
ROA began to exhibit an upward trend when environmental and social
π7i = β70 (10) performance indicators were implemented and incorporated by airlines
with different ownership types. The research results are described as
π8i = β80 (11) follows:

π9i = β90 (12) A. Interaction between ownership type and environmental perfor­
mance indicators with ROA:
π10i = β100 (13)
By substituting Equations (3)–(13) into Equation (2), Equation (14) ROA began to gradually increase when the value of environmental
can be obtained. performance indicators of state-owned and private airlines was 0.501
and 0.508, respectively.
Mixed ROAti = β00 + β10 ENVt− 1i + β20 ENVt−2 1i + β30 SOCt− 1i + β40 SOCt−2 1i

B. Interaction between ownership type and social performance in­

dicators with ROA:

6
 T.-C. Kuo et al.
Table 5
Estimation of multilevel quadratic parameters using Bayesian estimation.
Coef. Posterior S.D. 95% C.I. Coef. Posterior S.D. 95% C.I.

Fixed Effect Fixed Effect

ROAβ00 − 2.258 0.051 [-2.305, − 2.122]*** SOEs * GOV β51 0.625 0.146 [0.152, 0.723]*
ENV β10 2.307 0.102 [2.228, 2.350]*** PEs * GOV β52 0.626 0.151 [0.144, 0.728]*
ENV2 β20 − 2.269 0.227 [-2.347, − 1.933]** Random Effectrowhead
SOC β30 2.296 0.021 [2.245, 2.325]*** σ2 0.640 0.039 [0.560, 0.716]***
SOC2 β40 − 2.312 0.013 [-2.338, − 2.284]*** τ200 0.005 0.018 [0.001, 0.047]***
GOV β50 − 2.096 0.450 [-2.425, − 0.665]** τ211 0.004 0.044 [0.000, 0.047]***
SIZE β60 0.025 0.045 [-0.069, 0.108] τ222 0.020 0.094 [0.003, 0.242]***
ATURN β70 0.043 0.080 [-0.112, 0.210] τ233 0.003 0.006 [0.001, 0.019]***
ATURN2 β80 − 0.224 0.092 [-0.408, − 0.059]*** τ244 0.001 0.003 [0.000, 0.009]***
LEV β90 − 0.144 0.065 [-0.274, − 0.017]** τ255 0.208 0.229 [0.033, 0.915]***
LEV2 β100 − 0.043 0.053 [-0.139, 0.057] R-SQUARE
SOEs β01 0.686 0.012 [0.656, 0.699]*** Within Corporate Organizational Level
PEs β02 0.724 0.010 [0.702, 0.738]*** ROA 0.360 0.039 [0.284, 0.439]***
7

SOEs * ENV β11 − 0.683 0.036 [-0.695, − 0.646]*** Between Corporate Institutional Level
PEs * ENV β12 − 0.727 0.029 [-0.744, − 0.709]*** ROA 0.995 0.018 [0.953, 0.999]***
SOEs * ENV2 β21 0.682 0.067 [0.578, 0.706]** ENV S1 0.996 0.044 [0.953, 1.000]***
PEs * ENV2 β22 0.716 0.067 [0.622, 0.740]** ENV2 S2 0.980 0.094 [0.758, 0.997]***
SOEs * SOC β31 − 0.692 0.006 [-0.703, − 0.679]*** SOC S3 0.997 0.006 [0.980, 0999]***
PEs * SOC β32 − 0.720 0.006 [-0.729, − 0.704]*** SOC2 S4 0.999 0.003 [0.991, 1.000]***
SOEs * SOC2 β41 0.691 0.004 [0.681, 0.698]*** GOV S5 0.792 0.229 [0.085, 0.967]***
PEs * SOC2 β42 0.722 0.004 [0.713, 0.730]***
Model Fit
Number of Free Parameters 45
Deviance (DIC) − 430.451

Journal of Cleaner Production 310 (2021) 127380

T.-C. Kuo et al. Journal of Cleaner Production 310 (2021) 127380

ROA began to gradually increase when the value of social perfor­ present in the interaction between ownership type and both environ­
mance indicators of state-owned and private airlines was 0.501 and mental and social performance indicators. In the initial stages of
0.499, respectively. implementation of environmental and social performance indicators,
both state-owned and private airlines demonstrated a downward trend
C. Interaction between ownership type and governance performance in ROA; however, after a period of incorporation and implementation,
indicators with ROA: their ROAs gradually improved.

Whether state-owned or private, airlines experience a positive effect 5. Conclusion

of their governance performance indicators on ROA. A one-level in­
crease in governance performance indicators incorporated and imple­ This study was the first to propose and conduct empirical analysis to
mented by state-owned airlines will cause ROA to increase by 0.625, investigate and prove the moderating effect of airline ownership type on
while a one-level increase in governance performance indicators, the relationship between ESG performance indicators and ROA in
incorporated and implemented by private airlines, will cause ROA to corporate financial performance. It was found that corporate organiza­
increase by 0.626. tions exhibit a U-shaped relationship with ROA when conducting CSR
For the estimation of random effects, the estimated values of τ211 , τ222 , activities. This study proved that using ESG performance as a measure
τ233 , τ244 , and τ255 were 0.009, 0.020, 0.003, 0.001, and 0.208, respec­ and indicator of CSR could effectively determine the KPIs affecting
tively, all of which reached a significant level. This shows that, after short-term corporate performance, thereby providing managers with
controlling for ownership type at the corporate-institutional level, dif­ references for long-term strategic planning for the implementation and
ferences remained in the impact of variables at the corporate- improvement of CSR.
organizational level, namely, ESG performance indicators on ROA for There are some limitations of this study. First, the reporting of CSR
airlines. data by airlines is limited and insufficient—the lowest of all partici­
The model developed in this study also had a small value of deviance pating industries. Second, reporting lacks consistency, because the
information criterion (i.e., − 430.451), showing that the model fits the reporting structures and measurement frameworks differ. This study
data, yet the sample data are highly complex. used the disclosure of ESG performance indicators as the standard for
Note: ∗ρ < 0.05 **ρ < 0.01 ***ρ < 0.001 CSR disclosure, to measure their impact on short-term financial per­
According to Table 5 and the above analysis of empirical results, the formance of airline companies. However, Bayesian estimation was used
effects of ESG performance indicators on ROA were obtained, and the to analyze the multilevel quadratic growth model. Future research can
multilevel quadratic growth regression equation under the moderating conduct an in-depth study on category indicators for each performance
effect of airline ownership type is expressed as follows. indicator to obtain a clearer picture of the industry. In addition, many
companies are feeling the brunt of the recession caused by the COVID-19
ROAti = − 2.258 + 2.307ENVt− 1i − 2.269ENVt−2 1i + 2.269SOCt− 1i crisis. The impact of COVID-19 on passenger travel has been significant,
causing an abrupt decline in future bookings and revenue. Therefore,
− 2.312SOCt−2 1i − 2.096GOVt− 1i − 0.224ATURNti2 − 0.144LEVti some airlines have filed for bankruptcy. Future studies can investigate
+ 0.686SOEsi + 0.724PEsi − 0.683ENVt− 1i SOEsi − 0.727 ENVt− 1i PEsi the effect of COVID-19 on the relationship among ESG performance
indicators.
+ 0.682ENVt−2 1i SOEsi + 0.716ENVt−2 1i PEsi − 0.692SOCt− 1i SOEsi
+ − 0.720 SOCt− 1i PEsi + 0.691 SOCt−2 1i SOEsi + 0.722 SOCt−2 1i PEsi Credit authorship contribution statement
+ 0.625GOVt− 1i SOEsi + 0.626GOVt− 1i PEsi
[ ] Tsai-Chi Kuo, Hsiao-Min Chen and Hsien-Mi Meng: Method investi­
μ + μ1i ENVt− 1i + μ2i ENVt−2 1i + μ3i SOCt− 1i
gation, supervision, review, editing.
+ 0i
+μ4i SOCt−2 1i + μ5i GOVt− 1i + εti Hsiao-Min Chen: Data investigation, writing, review.
(15) Tsai-Chi Kuo and Hsiao-Min Chen: Conceptualization, Method
investigation, writing, review.
4.3. Summary of the case study Tsai-Chi Kuo, Hsiao-Min Chen and Hsien-Mi Meng: Discussion,
writing, editing.
This study found that private airlines exhibit the best short-term Tsai-Chi Kuo, and Hsiao-Min Chen: Method approach, result writing.
financial performance, followed by state-owned airlines, and finally, Tsai-Chi Kuo, Hsiao-Min Chen and Hsien-Mi Meng: Method investi­
by mixed-ownership airlines. The reason mixed-ownership airlines gation, supervision, review
perform the worst on CSR is related with leadership and culture. Due to
mixed-ownership, the leadership or culture may not be strong enough. Declaration of competing interest
In addition, managers and shareholders display severe conflicts of in­
terest. These factors result in weaker short-term financial performance. The authors declare that they have no known competing financial
In practice, private airlines placed greater emphasis on corporate interests or personal relationships that could have appeared to influence
financial performance using different strategies, including service the work reported in this paper.
quality improvement; however, these service quality improvements also
directly affected corporate profitability. Acknowledgments
From this study, 0wnership type has a significant moderating effect
on the impact of ESG performance indicators on ROA. According to the This research was funded by the Ministry of Science Technology,
empirical results of this study, extreme points (minimum values) were Taiwan, ROC grant number 108-2621-M-011 -001.

Appendix A. Airlines using Performance indicator of ESG and ESG scores table

8
 T.-C. Kuo et al.
Code Airlines Year ESG Environment Social Governance

Resource Use Emissions Innovation Workforce Human Rights Community Product Responsibility Management Shareholders CSR Strategy

1 American Airlines 2012 C B- B C B- B B- B+ B A+ A-

1 American Airlines 2013 C C- A- A A- B A- B+ C+ A- A+
1 American Airlines 2014 C C C- A- B- B- B B+ C- C A
1 American Airlines 2015 C B- B- C- A A- A B- A+ C A-
1 American Airlines 2016 C B- C+ C- A A- A+ B- A+ C+ A-
2 Delta Air Lines 2012 C B A A+ C B A B- C A- A
2 Delta Air Lines 2013 B- B A+ A A+ B A+ B+ C- A- A
2 Delta Air Lines 2014 B- B A A- B B- A+ B+ C- B A
2 Delta Air Lines 2015 C+ A+ A+ C- B- A A A- C C+ A+
2 Delta Air Lines 2016 C A+ A+ C- C A A+ A- B- B+ A
3 jetBlue 2012 0 0 0 0 0 0 0 0 0 0 0
3 jetBlue 2013 0 0 0 0 0 0 0 0 0 0 0
3 jetBlue 2014 0 0 0 0 0 0 0 0 0 0 0
3 jetBlue 2015 C+ C C+ C- D+ C- A D+ B- B+ A-
3 jetBlue 2016 C C- B+ C- C- D+ A D+ B+ B A
4 ANA All Nippon Airways 2012 B+ A- B C A- B C A+ A A+ A+
4 ANA All Nippon Airways 2013 B+ A- B C- B- B C- A+ A A+ A+
4 ANA All Nippon Airways 2014 B+ A- A- C- B+ B- D+ B+ A+ A- B-
4 ANA All Nippon Airways 2015 C+ A- B A- B+ B- C- A- A+ B A-
4 ANA All Nippon Airways 2016 B+ A- B A- B- B- D+ A- A+ C A+
5 Japan Airlines 2012 0 0 0 0 0 0 0 0 0 0 0
5 Japan Airlines 2013 B B- C A C- A C- D+ A B A
5 Japan Airlines 2014 B+ B- B- A- A A- D+ D+ A- B+ A
5 Japan Airlines 2015 B+ B- B A- A A- C- D+ B+ A A
5 Japan Airlines 2016 B+ B+ B A- A A D+ D+ A B+ B-
6 Cathay Pacific 2012 C- B+ B C A- A+ C B+ D- D B+
6 Cathay Pacific 2013 C- B+ C C- B+ A C+ B+ D- C B+
9

6 Cathay Pacific 2014 C- B+ C- C- B+ A- C C+ D- D+ B+

6 Cathay Pacific 2015 C A- C+ C- B A- C B- D- C- B+
6 Cathay Pacific 2016 C- A- B- C- C- A C- B- D- C- B+
7 Korean Air 2012 C A- A- A+ B+ A+ C+ B+ B- A- A
7 Korean Air 2013 C+ A- B A A- A C+ B+ D- A- A
7 Korean Air 2014 C A- B A- B+ A- B B+ D+ B+ A
7 Korean Air 2015 B+ C+ B+ A- A- A- B- A- B B+ A
7 Korean Air 2016 C C+ A A- B- B B- A- B- B+ A
8 Singapore Airlines 2012 C- B- B- C B B D+ D+ A D B
8 Singapore Airlines 2013 C B- B- C- B+ B C- D+ A B- B
8 Singapore Airlines 2014 B- B+ B C- B+ B- C+ A+ A B+ B+
8 Singapore Airlines 2015 C A A C- B+ B- B A+ A- B+ B
8 Singapore Airlines 2016 B+ A A C- A- B- B A+ B C B
9 Thai Airways 2012 C C B- B+ B+ C- B A D- D- C-
9 Thai Airways 2013 C C B- A B- C- B A+ D- C- D+

Journal of Cleaner Production 310 (2021) 127380

9 Thai Airways 2014 C C- A- A- B- B- B- A D- C- C+
9 Thai Airways 2015 C+ C+ A A- B- B- C+ A D- D+ C-
9 Thai Airways 2016 C+ C+ A+ A- A- B- C+ A D- B- C-
10 Turkish Airlines 2012 C+ D+ C- C C+ B- B- A+ C B+ C-
10 Turkish Airlines 2013 C- C- B- C- C C- C+ A C A+ C-
10 Turkish Airlines 2014 C+ C A C- C+ D+ C+ A D A B-
10 Turkish Airlines 2015 B- C+ A C- B+ C- B A+ C- A- C+
10 Turkish Airlines 2016 B- C+ B C- B D+ A A C+ B- C
11 Eva Air 2012 C C+ C- C D C- D+ B- C- A B-
11 Eva Air 2013 C C+ D+ C- D C- C- B- C+ A- C+
11 Eva Air 2014 C C+ C- C- D D+ C- B- A- A- C
11 Eva Air 2015 B+ B+ A- A- B B- C A B- A- B+
11 Eva Air 2016 C+ B A- A- A B- C- A C- A B+
12 China Airlines 2012 B- B- A- A+ A C- D+ B+ D C- B
(continued on next page)
 (continued )

T.-C. Kuo et al.

Code Airlines Year ESG Environment Social Governance

Resource Use Emissions Innovation Workforce Human Rights Community Product Responsibility Management Shareholders CSR Strategy

12 China Airlines 2013 B- C+ A- A A+ C- C- B+ D D- C+

12 China Airlines 2014 C+ B+ A+ A- A+ A+ C A+ D C B
12 China Airlines 2015 B+ A- A+ A- A+ A+ A- A+ D D- B-
12 China Airlines 2016 B+ A- A+ A- A+ A+ A- A+ D- C C+
13 China Southern Airlines 2012 B- C D A+ C B D D+ A+ B A
13 China Southern Airlines 2013 C+ C+ D A B- B D D+ A+ B+ A
13 China Southern Airlines 2014 C+ C+ D- A- C- B- D D+ B- C+ A+
13 China Southern Airlines 2015 C- B- D- A- C+ B- D B- A C+ A+
13 China Southern Airlines 2016 C- B C+ A- B+ A- D B- A+ C+ A+
14 Virgin Australia 2012 B- A- B+ C A+ C- B D C+ D+ A+
14 Virgin Australia 2013 B B+ B+ A A+ C- B D C A- A
14 Virgin Australia 2014 B B B- A- A+ D+ A D B- B- A
14 Virgin Australia 2015 C+ A- B+ A- A+ C- A- D C C- A
15 Virgin Australia 2016 B+ B A- A- A- D+ A- D+ B+ C A
15 Qantas 2012 C A+ C+ C A C- B+ A+ A B B+
15 Qantas 2013 C A+ C+ C- A C- B+ B+ A+ B+ B+
15 Qantas 2014 B- A+ B+ C- A- D+ B+ B+ A+ B B+
15 Qantas 2015 C A+ B+ C- B C- B- B- A+ C B+
15 Qantas 2016 A- A+ B+ A- A- B C A- A+ B- A+
16 Air New Zealand 2012 0 0 0 0 0 0 0 0 0 0 0
16 Air New Zealand 2013 0 0 0 0 0 0 0 0 0 0 0
16 Air New Zealand 2014 0 0 0 0 0 0 0 0 0 0 0
16 Air New Zealand 2015 B B- B C- A- B- B- D+ B+ C A
16 Air New Zealand 2016 C+ B+ A- C- A B- B- D+ A- D A
17 Lufthansa 2012 C A+ A+ A+ A+ A+ D A+ D C+ A+
17 Lufthansa 2013 C A+ A A A+ A+ D A+ C- B- A+
10

17 Lufthansa 2014 C A+ A+ A- A+ A+ D+ A+ D+ C A+
17 Lufthansa 2015 C A+ A+ A- A+ A+ D+ A+ D C A+
17 Lufthansa 2016 C A+ A+ A- A+ A+ C A+ D+ C A
18 Scandinavian Airlines(SAS) 2012 B B+ A C B- A+ A- C C+ A- A-
18 Scandinavian Airlines(SAS) 2013 B A A C- C+ A A- C C+ A- B+
18 Scandinavian Airlines(SAS) 2014 B- A A- A- C+ A- A- C C+ A- B+
18 Scandinavian Airlines(SAS) 2015 B+ A- A- A- B A- B B+ B A- A-
18 Scandinavian Airlines(SAS) 2016 C+ A B+ A- C+ A- B B A- A- A-
19 Avianca 2012 0 0 0 0 0 0 0 0 0 0 0
19 Avianca 2013 0 0 0 0 0 0 0 0 0 0 0
19 Avianca 2014 0 0 0 0 0 0 0 0 0 0 0
19 Avianca 2015 0 0 0 0 0 0 0 0 0 0 0
19 Avianca 2016 B- C C C B+ A- B B A- C- A-
20 LATAM Airlines Group 2012 B- B+ A- C A A- B B+ A+ A C
20 LATAM Airlines Group 2013 C+ B+ B+ C- C A B A+ C A B

Journal of Cleaner Production 310 (2021) 127380

20 LATAM Airlines Group 2014 B B+ B+ C- C+ A- B+ B+ C+ A- B+
20 LATAM Airlines Group 2015 B B+ B A- C- A A- A- C- A A-
20 LATAM Airlines Group 2016 C+ B+ B A- C A A- B- C A A-
21 EasyJet 2012 C+ D+ C C B+ C- D- A A+ B+ D+
21 EasyJet 2013 C- C- C+ C- B C- D A A+ C+ D+
21 EasyJet 2014 C D+ B+ A- B- D+ D A A+ A+ C-
21 EasyJet 2015 C+ C A- A- B- C- D B A B+ C
21 EasyJet 2016 B C B+ A- B D+ D B A+ B+ C
22 WestJet 2012 B- A- B C B C- A+ B C C- A-
22 WestJet 2013 C+ A- B+ C- B- C- A+ B- C- D+ A-
22 WestJet 2014 C+ C+ C+ C- C+ D+ A B B- D A-
22 WestJet 2015 C B B- C- C B- B A- C C C+
22 WestJet 2016 B- B+ B- A- C B- B A- D+ C- C+
23 Southwest Airline 2012 C+ A A C A- A- A+ D C+ A A
(continued on next page)
 T.-C. Kuo et al.
(continued )
Code Airlines Year ESG Environment Social Governance

Resource Use Emissions Innovation Workforce Human Rights Community Product Responsibility Management Shareholders CSR Strategy

23 Southwest Airline 2013 C+ A A C- A A- A+ C- C+ A A

23 Southwest Airline 2014 C A B+ C- A B+ A+ C- B A+ A
23 Southwest Airline 2015 C A+ A- C- A B+ A+ C D+ A A
23 Southwest Airline 2016 C A+ A- C- A+ B A+ C C A- A
24 Hawaiian Airline 2012 0 0 0 0 0 0 0 0 0 0 0
24 Hawaiian Airline 2013 0 0 0 0 0 0 0 0 0 0 0
24 Hawaiian Airline 2014 0 0 0 0 0 0 0 0 0 0 0
24 Hawaiian Airline 2015 C- D- C C- D C- B D+ D B C-
24 Hawaiian Airline 2016 C- D C C- D+ D+ B D+ D+ C C
25 United Airlines 2012 C B B- C C C- B+ C+ D- C B+
25 United Airlines 2013 C- B C+ C- C- A- B+ C+ D- C- B
25 United Airlines 2014 C- B C+ C- D+ B+ B+ C+ D- B+ B
25 United Airlines 2015 C- B B+ A- C A- A- B- D- C A-
25 United Airlines 2016 C- B- B+ A- C A- B- B- D- B A
26 Copa Airlines 2012 C- D+ D+ C D+ C- A- C+ D+ C+ C+
26 Copa Airlines 2013 C- D+ D+ C- D+ C- A- C+ D+ C+ C
26 Copa Airlines 2014 C- D+ C- C- D+ D+ A- C+ D+ D+ C
26 Copa Airlines 2015 C- D+ C C- D+ C- B B- D+ C+ C
26 Copa Airlines 2016 C D+ C- C- D D+ B B- C+ C+ D
11

27 Alaska Airlines 2012 0 0 0 0 0 0 0 0 0 0 0

27 Alaska Airlines 2013 0 0 0 0 0 0 0 0 0 0 0
27 Alaska Airlines 2014 0 0 0 0 0 0 0 0 0 0 0
27 Alaska Airlines 2015 B C- C C- A- C- A+ D+ A B A-
27 Alaska Airlines 2016 C+ C- C C- B+ A- A+ D+ A A+ A-
28 Air China 2012 C C D- C D+ C- C- C- B- B+ A
28 Air China 2013 C C D- A D+ C- D+ C D+ B+ A
28 Air China 2014 C C C- A- C- D+ C D C- D+ A
28 Air China 2015 C B- C A- C C- C- C+ C+ D+ A-
28 Air China 2016 C- B C+ A- C B- C- C C- D A-
29 Ryanair 2012 C D+ D+ A+ B- C- A- D+ D- C- D
29 Ryanair 2013 C D+ C- A B C- A- D+ A- C D+
29 Ryanair 2014 D+ D+ D+ A- C D+ A- C+ C D+ D+
29 Ryanair 2015 C- D+ D+ A- B+ C- B B- B- D+ D+
29 Ryanair 2016 C+ D+ D+ A- C+ D+ B B- B- D+ B

Journal of Cleaner Production 310 (2021) 127380

30 GOL Airlines 2012 B- C+ B+ C C- B A+ C- B+ B- B+
30 GOL Airlines 2013 C+ C+ B C- C B A- D A C+ B+
30 GOL Airlines 2014 B- C C C- A- B- C+ C A- C+ B+
30 GOL Airlines 2015 C+ C- C- C- C- C- C+ B A B- B+
30 GOL Airlines 2016 C C C C- D+ D+ C+ B A+ C+ B
T.-C. Kuo et al. Journal of Cleaner Production 310 (2021) 127380

Appendix B. The number and weights of indicators assigned to respective categories a according to the ESG division in the Thomson
Reuters EIKON database

Pillar Category Indicators in Scoring Weights Performance Indicators Weights

Environmental Resource Use 19 11% 34%

Emissions 22 12%
Innovation 20 11%
Social Workforce 29 16% 35.5%
Human Rights 8 4.50%
Community 14 8%
Product Responsibility 12 7%
Governance Management 34 19% 30.5%
Shareholders 12 7%
CSR Strategy 8 4.50%
TOTAL 178 100% 100%
Source: Thomson Reuters (2018).

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