An Institutional Perspective of Selective ESG Engagement

This study examines how institutional factors shape the selective engagement of environmental, social, and governance (ESG) practices in Real Estate Investment Trusts (REITs) across different regions. The resource-based view suggests that REITs may prioritize social and governance practices over environmental investment due to resource constraints. Analyzing 302 REITs from the U.S., Europe, and Asia (2012-2022), our study finds that institutional factors—environmental policy strictness and investor attitudes—lead to different outcomes: selective ESG strategies enhance profitability and market valuation in the U.S. but reduce them in Europe. These findings emphasize the critical role of institutional contexts in shaping corporate sustainability.