ESG impact of Michigan and Indiana right-to-work laws

ABSTRACT

We examine the Environmental, Social, and Governance (ESG) performance of Michigan and Indiana companies before and after they passed the Right-to-Work (RTW) laws in 2012 by referencing it against that of companies in states with and without RTW laws. Our findings indicate that after the laws were passed the Environmental and Social performance of companies in these two states declined on the compliance dimension and so did some of their Social performance on the proactive dimension. Outside of some of the common trends in the ESG performance of companies in states with and without RTW laws, the Social performance of companies in states without RTW laws declined on the proactive dimension as well after the laws were passed. Performance pertaining to Governance was unaffected for companies after the enactments.

KEYWORDS:

• Right to work
• ESG
• difference in difference
• Michigan
• Indiana

JEL CLASSIFICATION:

• G28
• J38
• M14
• G18

Disclosure statement

No potential conflict of interest was reported by the authors.

Data Availability Statement

Due to the nature of ongoing work on other related studies, the authors do not agree for their data to be shared publicly, so supporting data are not available.