Social indicators and environmental performance: an analysis of companies in smart cities

Abstract

This study explores the relationship between corporate social responsibility and environmental performance in the context of smart cities—urban environments integrating sustainability and digital technologies. Using a panel dataset of 13,140 firm-year observations from the top 20 smart cities worldwide (2014–2023), the analysis examines how overall social performance and its four sub-pillars—workforce, human rights, community, and product responsibility—influence environmental outcomes. Fixed-effects and dynamic panel (GMM-SYS) regression models reveal that higher social performance is significantly associated with stronger environmental outcomes, even after controlling for firm-specific financial characteristics and addressing potential endogeneity. Among the sub-pillars, workforce and community engagement exert the most substantial influence, underscoring the strategic role of human capital and ethical conduct. These findings highlight the interdependence between social and environmental dimensions of ESG and offer empirical support for integrated sustainability strategies. The results are particularly relevant for firms operating in innovation-driven urban contexts, as well as for policymakers seeking to promote corporate contributions to sustainable urban development. Limitations and avenues for future research are also discussed.