Public ownership and ESG policies: implications for firm productivity in local transportation

Adopting environmental, social and governance (ESG) policies can lead local transport firms to strengthen their reputation progressively, with benefits to their productivity. Ownership structures, especially public ownership prevalent in the transport sector, can also shape company productivity. This study delves into the effects of public ownership on the productivity of a sample of Italian transportation firms, with particular emphasis on their adherence (or lack thereof) to ESG principles. A weighted least squares (WLS) estimation was adopted to assess public ownership's impact on productivity, and a difference-in-differences (DID) approach to examine the combined effect of ESG commitment and ownership structures. Productivity is determined through the Total Factor Productivity (TFP) function. The results highlight a distinct differential in productivity boosts between ESG-compliant and non-ESG-compliant entities. Notably, non-ESG-compliant entities derive more pronounced benefits from public ownership than their compliant counterparts. These findings imply that public ownership is pivotal, especially for firms not adhering to ESG standards. The empirical evidence underscores the need for a more comprehensive understanding of the interplay between public ownership and ESG compliance in shaping firm productivity.