Creditworthiness of sustainable firms. An empirical analysis of the Italian Benefit Corporations

In today’s society, there is a growing awareness of sustainability at the corporate level, where more and more companies are investing to meet social and ethical expectations. Companies are being asked to communicate the social impact of their operations and are key stakeholders in achieving sustainability goals, especially in developed countries. Corporate social responsibility (CSR) activities, together with environmental, social, and governance (ESG) factors, have become critical to a company’s investors and represent important information for stakeholders seeking to be perceived as more trustworthy. To highlight the intangible value that resides in the logic of sustainability, Benefit Corporations, a new paradigm of for-profit companies that also pursue common benefit objectives, are increasingly emerging. An emblematic example of an alliance between business and community in pursuit of the common good is the Italian Società Benefit (SB), which formally guarantees a commitment to social and environmental audits through a synthesis of the best practices of ethical responsibility. Given these assumptions, and through the lens of signaling theory, this paper highlights the relationship between firms labeled as sustainability-oriented and their creditworthiness. The credibility of these firms is based on the recognition by funding providers of their role in sustainable development, which enhances their perceived creditworthiness and increases their funding options.