2014-32
The Role of Environmental, Social and GovernanceInitiatives in Securing Employee Retention
Oksana Arshynnikova Michiyuki Yagi
Katsuhiko Kokubu

The Role of Environmental, Social and GovernanceInitiatives in Securing Employee Retention
Oksana Arshynnikova1, Michiyuki Yagi2 and Katsuhiko Kokubu3
1Master Student, Graduate School of Business Administration, Kobe University(2-1, Rokkodai-cho, Nada-ku, Kobe-city, 657-8501, Japan)
E-mail: oarshynnikova@gmail.com
2 Associate Professor, Interfaculty Initiative in the Social Sciences, Kobe university(2-1, Rokkodai-cho, Nada-ku, Kobe-city, 657-8501, Japan)
E-mail:yagi@ruby.kobe-u.ac.jp (corresponding author)
3 Professor, Graduate School of Business Administration, Kobe University(2-1, Rokkodai-cho, Nada-ku, Kobe-city, 657-8501, Japan)
E-mail:kokubu@kobe-u.ac.jp

Existing literature focusing on the impact of corporate sustainable responsibility (CSR) on employees
can be broadly divided into two streams. One stream focuses on how CSR affects potential employees,
suggesting that it contributes to increasing the attractiveness of a company by creating a good reputation for
it. The other stream focuses on the impact of CSR on current employees, suggesting that CSR, including
environmentally responsible behavior, positively influences corporate reputation and, in turn, employee
commitment. The study empirically investigates the role of CSR in its three dimensions - environmental,social, and governance in retaining employees at an organizational level (i.e., employee turnover). This
study uses a global firm-level dataset of 632 observations for 2005-2013 from Bloomberg Professional
Service, regressing employee turnover on CSR activities in manufacturing, non-manufacturing, and energy
and utilities industries. The results indicate that activities in the environmental dimension do not significantly affect the retention of employees. In the social dimension, CSR training has a significant effect onretaining employees in all industries, but is not robust in each of the three industries. In the governancedimension, few governance activities affect employee retention in the manufacturing and energy and utilities industries, although some governance policies (such as the percentage of women on the board of
directors) reduce employee turnover rate in the non-manufacturing industry. This difference appears to be
due to industry characteristics regarding the extent of fluidity of the labor market.

Key Words : CSR, ESG initiatives, CSR training, employee turnover, global firms

11. INTRODUCTION
The realm of corporate social responsibility (CSR) has attracted the attention of scholars andmanagers for decades1). Much attention has been paid toward identifying how CSR initiatives
may lead to gaining certain competitive advantages2). Numerous scholars have argued that CSR
creates a positive impact by allowing better access to valuable resources3), attracting and retaining
higher quality employees 4), 5), allowing for better marketing of products and services 6), among
others.
This study focuses on the advantages that CSR provides in terms of strategic human resource
management (HRM), particularly in employee retention. Human resources are recognized as oneof the most important sources of competitive advantage7). A company’s success is increasingly
attributed to its ability to attract, motivate, and retain a pool of talented workers8). At the sametime, CSR initiatives are increasingly associated with better HRM practices and are also seen as
an important and effective way to attract, motivate, and retain the pool of employees9). This isbecause CSR reveals the values of the company to existing and potential employees and can beconsidered a part of the “employee value proposition.” Moreover, from the perspective of thesocial identification theory, CSR contributes to organizational commitment as it facilitates the
feeling of organizational membership and self-identification as a socially responsible member ofsociety by virtue of belonging to a reputable company.
Existing literature focusing on the impact of CSR on employees can be broadly divided into
two streams. The first stream concentrates on how CSR affects potential employees10), 4), 5); studies
suggest that CSR contributes to greater employer attractiveness by creating a good reputation or
increasing the company’s trustworthiness.
The second stream of literature focuses on the impact of CSR on current employees. One of theimportant topics here is the role of CSR in retaining existing employees. For instance, through asurvey of 4,712 employees, Brammer et al. (2007)11) examined the impact of CSR on organizational commitment and reported that external CSR is positively related to organizational com-2

mitment, with the contribution of CSR to organizational commitment being at least as great as job
satisfaction. Turker (2008)12) conducted a survey of 269 business professionals in Turkey andrevealed that CSR toward social and non-social stakeholders, employees, and customers were thesignificant predictors of organizational commitment. The study by Dogl and Holtbrugge(2014)13), which was based on a survey of 215 firms in China, Germany, India, and the UnitedStates, reported that a company’s environmentally responsible behavior positively influences its
environmental reputation and, in turn, employee commitment. The vast majority of studies in thisarea is based on self-reported surveys and focuses on the individual level of analysis that provides
an insight into the underlying mechanisms linking CSR with its outcomes.
This study investigates the role of CSR initiatives in retaining employees, considering an organizational level outcome, namely, employee turnover, and provides evidence at an organizational level of analysis. In particular, we empirically investigate how engagement in CSR, namely
in its three dimensions, environmental, social, and governance, affects employee turnover incompanies worldwide in three industries: energy and utilities, manufacturing, andnon-manufacturing. Our study addresses questions such as what kind of CSR activities are mosteffective in minimizing employee turnover, and whether the impact of CSR initiatives on turnoverdiffers across the industries. Following the findings, the implications of how socially responsible
business practices may benefit companies and their employees are discussed.

2. MATERIALS AND METHODS(1) Model
Despite the considerable attention devoted to the topic of CSR, the literature in this area remains fragmented and there is some uncertainty about its definition1), 14). We have used the definition suggested by Business for Social Responsibility (2000), regarded as one of those mostfrequently referred to14), which defines CSR as “business decision-making linked to ethical val-3

ues, compliance with legal requirements, and respect for people, communities, and the environment.” The definition covers the three main dimensions of CSR, namely environmental, social, and governance (ESG). These three dimensions, along with the economic dimension, aretraditionally used for social responsibility performance evaluation and reporting15). Therefore, inthis study, CSR is treated as a multi-dimensional construct that contains these ESG dimensions.
Further, each dimension includes two sub-dimensions – policy and performance. Subsequently,
we investigate the effect of the components of each sub-dimension on the employee turnover rate.
It should be noted that the “performance” sub-dimension does not include cost-related items due
to a lack of observations in the data available for this study.
The relationship between the company`s employee turnover rate and ESG dimensions (including the “policy” and “performance” sub-dimensions) of CSR is studied using the following
regression model:

Turnover =β1·Epolicy +β2·Eratio+β3Spolicy +β4 CSRTrain +β5 Fatality +Β6Gpolicy+β7Compliance+β8IndDir+β9WoBoard+β10Aage +β11AudMeet +β12ESGLink+β13Score+β14Controls+αi+αt+ewhere αi and αt denote the fixed effects of firm i and year t, respectively and e denotes the error
term. Using the coefficient in the equation, we test the relationship between each variable and theemployee turnover rate. Dependent variable Turnover denotes the number of employees that left
the company within the past year, expressed as a percentage of the average total number of employees. Each independent variable used in the model is described below, with its expected sign
hypothesized.
a) Environmental dimension
The policy sub-dimension is represented by the Epolicy variable, which indicates the degree of
implementation of environmental policies. Performance is measured by Eratio, which refers to4(1)

the energy efficiency of the company as environmental responsibility is increasingly being demanded by employees. For example, Bauer and Aiman-Smith (1996)16) conclude that companies
with a positive approach to the environment are perceived as more attractive employers, whilefindings by Dogl and Holtbrugge (2014)13) suggest that a company’s environmental responsibility
positively influences employees’ organizational commitment. Therefore, we expect a negative
sign of Eratio and Epolicy to employee turnover.

b) Social dimension
Spolicy indicates the degree of the company’s implementation of social policies. The expected
sign of Spolicy is negative to turnover because implementation of social policies ensures a favorable work environment and provides opportunities and other benefits apart from remuneration,
which are part of the employee value proposition. The performance sub-dimension is represented
by CSRTrain and Fatality variables. CSRTrain indicates whether the company has conducted
CSR training for employees. We expect a negative sign of CSRTrain to employee turnover for thefollowing reasons: first, training is a direct investment by the company into human capital.
Second, the implementation of CSR training in the company contributes to a better communication of its values to the employees. Thus, it would contribute to higher commitment to the company11) and subsequently, a lower employee turnover rate. Fatality expresses the degree of fatality
cases in the company. The expected sign of Fatality to turnover is positive because a higher fatality ratio indicates potential danger to the life of the employee caused by worsening working
conditions, inadequate safety and training, and other management practices, which subsequently
leads to a decline in commitment.

c) Governance dimension
The expected sign of Gpolicy, Compliance, IndDir, AudMeet, ESGLink, and Score to turnoveris negative because these factors contribute to the promotion of transparency, accountability, an
ethical code of conduct, and commitment to ESG goals. This, in turn, facilitates a more favorable

5and trustworthy working environment. The expected sign of WoBoard to turnover is negative
because having women among Board members would promote equal opportunities for womenand consideration of their needs at the workplace, and subsequently lead to lower female employee turnover rate. It can be especially significant for industries with more female employees
such as retailing or services. The expected sign of BAge to turnover is positive because younger
Board members, as well as executives, would be more receptive to the current dynamic environment and changing needs of employees.
Controls denotes control variables for firms, with firm-specific characteristics. We use four
control variables: firm size (Size), return on assets (ROA), capital labor ratio (lnKL), and labor
efficiency (lnLEff).

(2) Data
This study uses global firm data from Bloomberg Professional Service in the period 2005 2013. The data include ESG data, financial data, and CDP data. The sample contains 632 observations in three industry categories: energy and utilities (142 observations), manufacturing(366 observations), and non-manufacturing (124 observations). The sample excludes the financial
industry due to the lack of observations, as only 11 observations have been identified.
Variables Epolicy and Spolicy refer to the number of environmental and social policies implemented by the company. Both Epolicy and Spolicy are operationalized as the sum of dummy
variables. Each dummy variable refers to one of seven environmental or one of five social policies
respectively. The types and descriptions of the policies are provided in Table 1 and Table 2.
Environmental efficiency is measured by the logarithm of sales divided by the company’s totalenergy consumption (Eratio). Fatality ratio (Fatality) is calculated as the number of fatality cases
in a certain year divided by the total number of employees of the company. We use dummy
variables to measure the implementation of CSR training (CSRtrain), Business ethics policy(Gpolicy), and the linking of executives’ compensations to ESG goals (ESGLink). Compliance is6

operationalized as the sum of three dummy variables that indicate whether the company complies
with GRI criteria, whether it is a signatory to the UN Global Compact, and if its application level
was checked by the GRI. Independent directors and women on the Board are measured as apercentage of total Board membership. In order to measure the degree of ESC disclosure (Score),
we use a proprietary Bloomberg score.
Control variables include firm size (Size), return on assets (ROA), capital labor ratio (lnKL), andlabor efficiency (lnLEff). Size denotes the natural logarithm of the firm’s total assets. ROA is
calculated as earnings before tax (EBIT) divided by total assets. lnKP is the logarithm of thecapital labor ratio, calculated as net fixed assets divided by the number of employees. lnLEff
denotes the logarithm of labor productivity, calculated as revenue divided by the total number of
employees. Table 3 shows the descriptive statistics.

a) Employee turnover rate
Since human capital is central to a company’s performance, employee turnover is an important
issue that may create significant challenges for the company. In HRM studies, employee turnoveris an important metric as it has a significant cost implication, influences the overall businessperformance, and has the potential to become difficult to control17). In this study, we refer to
employee turnover as “the number of employees that left the company within the past year expressed as a percentage of the average total number of employees.” Employee departures affectthe company in terms of financial costs as well as intangible knowledge and productivity-related
costs. The loss of talented employees impedes a company’s ability to innovate and develop new
products as well as its relational capital such as its relationship with customers, investors, andother stakeholders.
Employee turnover rate tends to differ across industries. Our sample contains three industry
categories: energy and utilities, manufacturing, and non-manufacturing. In the sample, the meanvalue of employee turnover differs across industry categories, namely, 8% in energy and utility,7

10.53% in the manufacturing industry, and 14.05% in the non-manufacturing industry. Whenconsidering why employee turnover differs across industries, it is necessary to consider industry
characteristics.
Traditionally, the energy and utilities sector rates lowest in terms of employee turnover18), andmany factors have contributed to this. First, companies in this industry used to enjoy a stableenvironment and profits, due to continuously growing energy demand and high entry barriers andthus relatively low competition. Second, the sector remains highly regulated. It is regulated interms of price as many companies continue to be owned by the state or are regarded by the authorities as natural monopolies, preventing such companies from earning abnormal profits butallowing reasonable profits. Moreover, it is strongly regulated in social and environmental areas
such as workplace safety, polluting the atmosphere, etc. Finally, since working in this industry
typically requires specific skills, companies spend more to recruit and train new employees (perhire cost in the utilities industry is $3,936 as compared to $2,549 in retail/wholesale trade18) andprovide more inducement, such as benefits, to retain their staff. However, despite the overall
relatively low employee turnover rate across the industry, it has become an increasingly problematic issue. Recently, the industry has been undergoing significant changes driven by a shift
toward green power sources, a changing business and customer management model, deregulation,and increasing competition19). Under such circumstances, according to the PwC 14th Annual CEO
Survey (2011)20), 61% of surveyed CEOs in the oil and gas industry indicated that over the next
three years, they were concerned about "competitors recruiting some of their best people." Additionally, 64% of these same CEOs believed that "there is a limited supply of talent with the rightskills." PwC research indicates that utilities are losing workers at an accelerating rate. The voluntary turnover rate increased by a full percentage point between 2010 and 2012, and for highperformers and early tenured employees, the rate of separation was especially high21).
The manufacturing industry is characterized by moderate or low employee turnover rate. By
definition, this industry is not regarded as “green” as working at a manufacturing site may be

8connected to certain risks to employees’ health. Therefore, similar to the energy and utility industry, the manufacturing industry is subject to various local and international mandatory
standards and regulations in terms of their environmental and social performance. Moreover,working in manufacturing also requires certain skills, suggesting more hiring and training costs,
which induces employers to provide more social benefits in order to retain their staff. Focus onsocial aspects, as well as high competition in the manufacturing industry, makes companies pay
more attention to governance initiatives, which in turn contributes to lower employee turnover.
For instance, as demonstrated in Table 4, in our sample, across all industry categories, the manufacturing industry has the best performance in the governance area.
It should be noted that cluster-level endogeneity might appear in the regression for “all industries” case. This is because employee turnover rate differs across different industries (Table 5),
which provides that clusters appear based on employee turnover. Therefore, along with “all industries” level regression, we will check the robustness of results by regressing model in each of
three industries.

3. RESULTS
Table 6 demonstrates the regression results for four cases: all industries, energy and utility,
manufacturing, and non-manufacturing. In the case of all industries, among ESG dimensions,
results are found in the social and governance dimensions. No statistically significant findings are
identified in the environmental dimension, which implies that it is the least relevant for explanation of employee turnover. In the social dimension, employee turnover responses are statisticallynegatively on CSR training, which indicates that implementation of CSR training contributes tothe decrease of employee turnover. This is in line with our hypothesized sign and supports thefindings of Brammer et. al. (2007)11) that training enhances organizational commitment. Theysuggest that training has a direct benefit to employees through corporate investment in employee

9human capital. Additionally, from the perspective of social identity theory, it provides an indirect
benefit through employee identification with the company’s CSR. Moreover, we suggest that theimplementation of CSR training increases the awareness of employees about the firm’s ESG
performance and, in this way, effectively communicates the firm’s value to its employees.
A positive relationship between turnover and business ethics policy (Gpolicy variable), whichis contrary to our hypothesis, can be explained by the increased recognition of ethical guidelines
in companies with high employee turnover rate as an effective instrument for promoting atrustworthy and favorable working environment, and subsequently for retaining employees.
However, when we check the robustness of this effect in each industrial regression, this positive
relationship is not seen in any of three industry.
In the case of the manufacturing industry, no statistically significant results were found in any
ESG dimension. The only statistically significant relationship with employee turnover was identified with control variable ROA. Such results may be explained by the industry characteristics
such as environmental and social regulations and social benefits for employees. They minimize
environmental impact, create more favorable working conditions, and subsequently explain thelack of employee’s concern over environmental and social issues when compared to factors suchas ROA. As for governance dimension, no significant results with respect to employee turnover
may be explained by the industry’s high overall performance in this area.
In the non-manufacturing industry, statistically significant results are found in the governancedimension, namely, for the percentage of women on the Board, implementation of the Board’s
audit meetings, and the linking of executives’ compensations to ESG goals and disclosure. In
particular, the results indicate that a higher percentage of women on the Board contribute to thedecrease of employee turnover. This is because women representativeness at the executive and
Board level promotes a better consideration of interests and needs of this demographic group,
which is significant in non-manufacturing industries. Furthermore, employee turnover responds
statistically negatively on implementation of Board’s audit meetings and linking of executives’

10compensations to the ESG goals. This suggests that such governance measures encourage anenvironment of accountability and transparency, enhance executives’ commitment to ESG objectives, and in turn facilitates employee commitment. The results are in line with our hypothesisof the expected sign for these variables. Employees’ concern over governance in this industry canbe partially explained by the greater number of female workers who have stronger preferences fordiscretionary behavior and fair working practices11).
At the same time, the positive sign of the result obtained for ESG disclosure score is contrary to
the hypothesized one. Such a result can imply that in companies with high employee turnover,managers facilitate disclosure as an instrument to retain employees. This, in fact, is in line withlegitimacy theory, which posits that organizations continually seek to ensure that they operate
within the bounds, norms, and expectations of respective societies or targeted groups. In our case,it implies that knowing the employees’ expectations of more transparency and disclosure, companies uses it to decrease employee turnover. Moreover, Deegan (2002)23) suggests that, consistent with resource dependence theory, legitimacy theory suggests that if managers consider thatthe supply of a particular resource is vital to company survival, they will pursue strategies toensure the continued supply of that resource. Targeted disclosure is mentioned among suchstrategies.
In the energy and utility industry, among all ESG variables, employee turnover responded
statistically significant only to ESG disclosure. None of the significant results in the environmental and social dimensions can be explained the same way as in the manufacturing industry
case, namely by strong environmental regulations imposed for the industry and a socially protected, favorable working environment. Similar to the non-manufacturing industry case, thepositive sign of this relationship can be explained from the legitimacy theory perspective. It implies that in companies with a growing employee turnover rate, ESG disclosure has been facilitated to enhance organizational commitment.

11

4. CONCLUSION
CSR initiatives are increasingly believed to be an important instrument to retain employees.
This study empirically examines how CSR, namely ESG initiatives, affects employee turnover incompanies worldwide and in three industries – energy and utilities, manufacturing, andnon-manufacturing.
The overall result suggests that initiatives in the environmental dimension do not significantly
affect employee turnover. In the social dimension, our findings indicate that employee turnover
responds statistically negatively to the implementation of CSR training. It contributes to a decrease in employee turnover as it helps to communicate the company’s value more effectively,
provides a direct benefit to employee through investment into human capital, and an indirect
benefit through employee identification with the company’s CSR. Further, in the governancedimension, the statistically positive response of employee turnover on business ethics policy
suggests an increased attention to such policies at workplaces with high employee turnover, as
fairness and equality at workplace contributes to higher organizational commitment. However,this relationship is not robust across all three industries.
Findings for separate industry cases suggest several conclusions. First, in the manufacturingindustry, employee turnover is not significantly affected by CSR activities. Second, in the
non-manufacturing industry, employee turnover is responsive to governance initiatives such as
the percentage of women on the Board, implementation of the Board’s audit meetings, and linking
executive’s compensations to ESG goals and disclosure. This finding emphasizes these employees’ concern over fairness, transparency, and accountability, which is partially explained by
the non-manufacturing industry employing more female workers than male workers and theirstrong preferences for transparent and fair working practices. In the energy and utilities industry,a significant relationship to turnover rate is found only with ESG disclosure, while its positive
sign suggests greater disclosure as a reaction to increasing concern over employee turnover.

12This study contributes to existing literature by adding to the evidence on the important role of
CSR initiatives in employee turnover reduction. Results are obtained at an organizational level ofanalysis and are in congruence with the existing studies which, on an individual level of analysis,suggest that CSR initiatives contribute to higher organizational commitment24), 11), 12). At the sametime, this study has significant limitations. First, we used a simple model with no mediators ormoderators taken into account, which does not allow for the consideration of underlying mechanisms linking CSR initiatives to lower employee turnover rate. Moreover, the sample used forthe study is limited to 632 observations due to a wide range of independent variables and thelimitations of available data.
The findings of this study have practical implications for managers. First, the results confirm
that some CSR initiatives, particularly in social and governance dimensions, can be an effective
tool to influence employee turnover. Companies should pay special attention to the implementation of CSR training and Business Ethic Policies. The implementation of CSR training will help tocommunicate and reveal the values of the company to employees and increase organizational
commitment by investing in employee human capital and facilitating employee identification
with company. The introduction of ethical guidelines in the company will enhance fairness andequality, contribute to the creation of a favorable work environment, and subsequently to higherorganizational commitment and lower employee turnover.
Moreover, ESG initiatives, as a measure against high employee turnover, should be implemented with consideration of employee needs, bearing in mind the particular industry and industry characteristics. For instance, according to our results, employees in the non-manufacturingindustry show more concern about governance initiatives such as an increased percentage ofwomen on the Board, implementation of Board’s audit meetings, and linking executives’ compensations to ESG goals and disclosure. As already mentioned, this can be partially explained bymore female workers and their strong
preferences for transparent and fair working practices. Therefore, promotion of equality, discre-13

tionary behavior, transparency, and accountability at the workplace as measures for enhancing
employee commitment is effective in non-manufacturing industries, and can be successfully
practiced at workplaces where female employment is currently encouraged. Given the recentchanges in the energy and utility industry, and growing concern about employee turnover,companies in these industries should put more efforts into articulating their values to existing
employees and signaling it to potential employees, which can be effectively managed throughextensive CSR training and ESG disclosure respectively.

ACKNOWLEDGMENT: This study was carried out as part of the SESAMI project in Kobe
University, and was supported by research grant from the Research Institute of Advanced Management.

REFERENCES
1)

Aguinis, H. and Glavas, A.: What we know and don’t know about Corporate Social Responsibility: A review andResearch Agenda, Journal of Management, Vol. 38, No. 4, pp. 932-968

2)Porter, M. E., & van der Linde, C.: Green and competitive, Harvard Business Review, Vol. 73, No. 5, pp. 120-134,
1995.

3)

Waddock, S.A., Graves, S.B.: The corporate social performance – financial performance link, Strategic Management Journal, Vol. 18, No 4, pp. 303-319, 19974)

Turban, D. B., and Greening, D. W.: Corporate social performance and organizational attractiveness to prospective employees, The Academy of Management Journal, Vol. 40, No. 3, pp. 658-672, 1997.

5)

Greening, D. W. and Turban, D. B.: Corporate social performance as a competitive advantage in attracting aquality workforce, Business & Society, Vol. 39, No. 3, pp. 254-280, 2000.

6)

Fombrun, C.J.: Reputation: Realizing value from the corporate image. Boston, MA: Harvard Business School
Press, United States, 1996.

7)

Pfeffer, J.: Competitive advantage through people. California Management Review, Vol. 36, No. 2, pp. 9-28,
1994.

14

8)

Michaels, E., Handfield-Jones, H., Axelrod, B.: The war for talent, Boston: Harvard Business School Press, 2001.

9)

Bhattachaya, S.S., and Korschun, D.: Using Corporate Social Responsibility to Win the War for Talent, MIT
Sloan Business Review, Vol. 49, No. 2, 2008

10) Albinger, H. S. and Freeman, S.J.: Corporate Social Performance and Attractiveness as an Employer to Different
Job Seeking Populations, Journal of Business Ethics, Vol. 28, No. 3, pp. 243–253, 2000.
11) Brammer, S., Millington, A., and Rayton, B.: The Contribution of Corporate Social Responsibility to Organizational Commitment, The International Journal of Human Resource Management, Vol. 18, No. 10, pp. 1701-1719,
2007.
12) Turker, D.: How corporate social responsibility influences organizational commitment, Journal of Business
Ethics, Vol.89, pp. 189-204, 2009.
13) Dogl, C. and Holtbrugge, D.: Corporate environmental responsibility, employer reputation and employee commitment: an empirical study in developed and emerging economies, The International Journal of Human Resource
Management, Vol. 25, No. 12, pp. 1739-1762, 2014.
14) Dahlsrud, A.: How Corporate Social Responsibility is defined: An analysis of 37 definitions, Corporate Social
Responsibility and Environmental Management, Vol. 15, No. 1, pp. 1-13, 2008.
15) Global Reporting Initiatives: G4 Sustainability Reporting Guidelines, 2013,https://www.globalreporting.org/resourcelibrary/GRIG4-Part1-Reporting-Principles-and-Standard-Disclosures.p
df accessed on June 14, 2014.
16) Bauer, T.N., and Aiman-Smith, L.: Green Career Choices: The Influence of Ecological Stance on Recruiting,
Journal of Business and Psychology, Vol. 10, No. 4, pp. 445-458, 1996.
17) Hancock, J.I, Allen, D. G., Bosco, F.A., MacDaniel, K.R. and Pierce, C.A.: Meta-analytic review of employee
turnover as a predictor of firm performance, Journal of Management, Vol. 39, No. 3, pp. 573-603, 2011.
18) SHRM Human Capital Benchmarking Database: Executive Brief: Differences in employee turnover across key
industries, 2011
http://www.shrm.org/research/benchmarks/documents/assessing%20employee%20turnover_final.pdf accessedon July 01, 2014.
19) Pricewaterhouse Coopers: Energy Transformation: The impact on the power sector business model, 13th PWC
AnnualGlobalPower

and

Utilities

Survey,http://www.pwc.com/gx/en/utilities/global-power-and-utilities-survey/assets/pwc-global-survey-new.pdf
cessed on June 20, 2014

15

2013
ac-

20) Pricewaterhouse Coopers: Growth reimagined: The talent race is back on, 14th Annual Global CEO Survey, 2011
http://www.pwc.lu/en/hr/docs/pwc-ceo-survey-talent-race.pdf accessed on July 07, 2014.
21) Pricewaterhouse Coopers: Power and utilities changing workforce: Keeping the lights on, December 2013
http://www.pwc.com/us/en/power-and-utilities/publications/assets/pwc-power-utilities-changing-workforce.pdf
accessed on July 18, 2014.
22) International Labour Organization: Global Employment Trends for Women, 2012
http://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/documents/publication/wcms_195447.pdf accessed on July 12, 2014.
23) Deegan, C.: The Legitimizing Effect of Social and Environmental Disclosures - A Theoretical Foundation, Accounting, Auditing and Accountability Journal, Vol. 15, No. 3, pp. 282-311, 2002.
24) Ali, I., Rehman, K. U., Ali, S.I., Yousaf, J. and Zia, M.: Corporate Social Responsibility influences, employee
commitment and organizational performance, African Journal of Business Management, Vol. 4, No. 12, pp.
2796-2801, 2011.

16

Table 1 Description of environmental policies
No
1
2

3
4
5

6
7

PolicyBiodiversity Policy

Description
Indicates whether the company has implemented any initiatives to ensure the protection of biodiversity
Climate Change Policy
Indicates whether the company has outlined its intentions to
help reduce global emissions of the Greenhouse Gases thatcause climate change through its ongoing operations and/or
the use of its products and services
Emission Reduction Policy Indicates whether the company has implemented any initiatives to reduce its emissions to atmosphere
Energy Efficiency Policy
Indicates whether the company has implemented any initiatives to make its use of energy more efficient
Environmental Quality
Indicates whether the company has introduced any kind ofManagement Policy
environmental quality management and/ or environmental
management system to help to reduce the environmental
footprint of its operations
Green Building Policy
Indicates whether the company has taken any steps towards
using environmental technologies/ or environmental principles in the design and construction of its buildings
Waste Reduction Policy
Indicates whether the company has implemented any initiatives to reduce the waste generated during the course of its
operations

17

Table 2 Description of social policies
No
1

PolicyEqual Opportunity Policy

2

Fair Remuneration Policy

3

Health and Safety Policy

4

Human Rights Policy

5

Training Policy

Description
Indicates whether the company has made a proactive
commitment to ensure non-discrimination against any typeof demographic group
Indicates if the company has demonstrated a group widecommitment to ensure payment of fair wage (could be
defined as minimum, living or some other criteria) to all
Group employees, even in those countries that do not legally require a minimum wage
Refers to the fact whether the company has recognized its
health and safety risks and responsibilities and is making
any effort to improve the management of employee healthand/ or employee safety
Indicates if the company has implemented any initiatives toensure the protection of the rights of all people it works
withIndicates whether the company has implemented any initiatives to train new and existing employees on career development, education or skills

18

Table 3 Descriptive statistics
Variable
Dependent variable
TurnoverIndependent variables
Environmental
Epolicy
PolicyPerformance

EratioDescription

obs

mean

s.d

min

max

Employee turnover rate which refers tonumber of employees that left the company within the past year expressed as thepercentage of the average total number of
employees

632

10.65

6.07

0.06

33

Indicates the number of environmental
policies implemented by company
Energy efficiency calculated as logarithmof sales divided by total energy consumption

632

4.32

1.23

0

7

632

21.49

1.93

16.43

26.38

Indicates the number of social policies
implemented
Indicates whether company conducts
CSR trainings
Fatality ratio, calculated as number offatality cases divided by total number of
employees

632

3.64

0.82

0

5

632

0.09

0.28

0

1

632

0.00

0.00

0

0.00

632
632

0.94
0.63

0.24
0.80

0
0

1
3

632
632
632
632

66.31
13.80
58.83
6.57

21.74
10.51
3.94
4.35

10
0
46.08
0

100
60
70.33
57

632

0.05

0.22

0

1

632

52.41

9.51

24.79

85.12

632

0.10

0.09

−0.11

0.88

632

12.34

1.66

7.68

17.76

632
632

23.42
13.00

1.43
0.96

18.46
10.25

27.25
17.63

SocialPolicySpolicy

Performance

CSRtrain
Fatality

PolicyGovernanceGpolicyCompliance

Performance

IndDir
WoBoardBAge
AudMeetESGLink

Score
Control variables
ROA
lnKL
Size
lnLEff

Refers to Business ethics policy
Indicates company’s compliance to international regulations. Includes: GRI
criteria compliance; Signatory to UN
Global compact, Whether applicationlevel was checked by GRI
Indicates % of Independent Directors
Indicates % of women on Board
Board’s average age
Indicates the number of Board’s Audit
Meetings conducted
Indicates whether the executives’ compensation is linked to ESG goals
Bloomberg’s ESG disclosure score
Return on Assets, calculated as EBIT
divided by total assets
Logarithm of capital labour ratio, calculated as fixed assets divided by number of
employees
Logarithm of total assets
Logarithm of labor efficiency, calculated
as logarithm of sales divided on total
number of employees

19Table 4 Governance performance across industries
Variable
GpolicyComp
IndDir
WoBoardBAge
AudMeetESGLinkScore(manufacturing)
mean
0.96
1.66
67.19
13.98
59.16
6.26
0.07
52.84

(non-manufac-turing)
mean
0.89
1.46
65.33
15.55
57.55
5.72
0.03
48.80

20

(energy and utilities)
mean
0.93
1.69
64.89
11.82
59.08
8.13
0.03
54.45

Table 5 Employee turnover: Descriptive statistics across industries
VariableTurnover
All industries
ManufacturingNon-manufacturing
Energy and utility

obs

mean

s.d

min

max

632
366
124
142

10.65
10.53
14.05
8.00

6.07
5.11
8.16
4.65

0.06
0.85
2
0.06

33
32
33
30

21

Table 6 Regression analysis
(2)
(3)
(4)
energy and utility
non-manufacturing
manufacturing
Dep.variable: Turnover
Epolicy
−0.18
−1.02
−0.81
−0.15
(0.23)(0.68)(0.54)(0.30)
Eratio
1.14
2.42
2.55
0.79
(0.78)(1.55)(2.74)(1.17)
Spolicy
0.05
−0.02
−0.43
5.16
(0.31)(0.67)(0.81)(0.44)
CSRTrain−1.43*
−1.34
−1.77
−0.90
(0.74)(1.81)(1.89)(0.94)
Fatality
885.171365.36−2004.91
651.31(579.00)(1117.71)(3448.79)(686.75)
Gpolicy
3.50***
2.52
1.16
2.23
(1.04)(3.46)(1.57)(2.44)
Compliance
−0.37
−1.32
−1.10
−0.43
(0.36)(0.57)(0.85)(0.48)
IndDir
0.03
0.49
−0.06
0.33
(0.02)(0.06)(0.73)(0.02)
WoBoard0.03
0.03−0.28**
0.06(0.03)(0.06)(0.12)(0.04)
BAge
0.02
−0.21
0.00
0.16
(0.93)(0.19)(0.27)(0.13)
AudMeet−0.05
0.02−0.53**−0.14(0.05)(0.07)(0.26)(0.11)ESGLink
0.09
1.22−5.69**
1.01(0.91)(2.44)(2.72)(1.01)
Score
0.05
0.36***
0.31**−0.43(0.40)(0.12)(0.12)(0.05)
ROA−7.31**
3.29−0.96−11.55**(3.67)(11.09)(9.04)(4.57)
lnKL
−0.26
−0.09
9.48***−0.88(0.38)(0.44)(2.56)(1.39)
Size−0.16
4.49**
0.39
0.11(0.83)(2.00)(3.07)(1.43)
lnLEff
0.62
1.82
−0.90
0.69
(0.83)(1.35)(3.07)(1.35)
Constant−22.41−180.03***−154.32*−17.46(22.10)(59.35)(80.68)(30.94)
Firm fixed effects
Yes
Yes
Yes
Yes
Year fixed effects
Yes
Yes
Yes
Yes
obs
632
142
124
366
year
05-13
05-13
05-13
05-13
Within R-squared
0.14
0.40
0.53
0.19
Overall R-squared
0.04
0.001
0.03
0.03
Notes: ***, **, and * denote significances at the 1%, 5%, and 10% level, respectively. Coefficients are withoutparentheses, and standard errors are in parentheses.
Variable(1)
all industries

Acknowledgement This research is supported by JSPS KAKENHI Grant Number 25285138.

[2014.10.22 1179]

22