The impact of environmental, social and governance scores on corporate risk: evidence from Chinese listed companies

This study reveals that improvements in environmental, social, and governance (ESG) scores can significantly reduce market-based risk for Chinese listed companies. Essentially, firms that perform better in ESG metrics face less volatility in their stock prices and overall market risk. This matters because as global investors increasingly prioritize sustainable practices, understanding the link between ESG performance and corporate risk can guide better investment decisions and corporate strategies. The findings suggest that integrating strong ESG practices not only aligns with global sustainability goals but also offers tangible financial benefits.