ESG and crowdfunding platforms

We hypothesize that environmental, social, and governance (ESG) goals enable crowdfunding platforms to attract more investors and thus survive longer. Using data on the population of 508 security-based platforms established in the 38 OECD countries between 2007 and 2020, we document that platforms with higher levels of ESG selection criteria are more likely to survive over time. The importance of ESG criteria is more pronounced for platforms operating in countries with lower power distance. In decomposing ESG, we find that governance is the most significant component of the three, while environmental criteria have increased in importance for platform survival in recent years.

Automated summary

This study finds that environmental, social, and governance (ESG) goals are critical for crowdfunding platforms to attract investors and enhance their survival. Analyzing data from 508 security-based platforms established in 38 OECD countries between 2007 and 2020, it reveals that platforms with higher levels of ESG selection criteria are more likely to survive in the long run. The importance of ESG criteria is particularly pronounced for platforms operating in countries with lower power distance, with governance being the most significant component, and environmental criteria gaining importance for platform survival in recent years.