Welcome submission
      
login  |  register

Finance and Economics Vision

Volume4 nos.1 February 2023 ISSN 2755-3272

Previous Article Next Article

Does ESG Ratings matter? An empirical study on Sustainalytics’s ESG risk scores and US stocks’ return

  • Sonia Yin, Xiangzhu Shi, Qikai Feng, Jack Yang, Jiahao Ren
    College of art and science, Washington University in St. Louis, St Louis, USA, 63105, yinsoniasx05@gmail.com,
    Sino-Canada School, Suzhou, China, 215211, 2373721255@qq.com,
    North London Collegiate School, Singapore, 109708, fengqikai2020@gmail.com
    Kent School, Connecticut, USA, 06757, jyang3244@gmail.com,
    International Department, Chengdu Shude High School, Chengdu, China, 610066, 2503249347@qq.com

  • This empirical study examines the importance of ESG (Environmental, Social, and Governance) ratings in the context of US stocks returns, utilizing Sustainalytics' ESG risk score serving as a crucial metric. ESG-related news is initially used for selecting firms, followed by a secondary screening process based on Sustainalytics’ ESG Risk Scores. Eighteen firms, initially characterized by higher ESG risk but later improving their ESG risk scores, underwent comprehensive individual and holistic event studies in the US stock market. The results revealed a minor impact at the individual level but a significant collective influence. Additionally, six firms initially with lower ESG risk but deteriorating risk scores were also examined, but other external factors potentially influenced the outcome. Understanding the influence of ESG ratings on financial performance is critical for investors, legislators, and corporate decision-makers as the emphasis on sustainable investing grows. The research findings have the potential to impact investment strategies and corporate practices, contributing to a deeper understanding of the emerging landscape of responsible and sustainable finance.

    Citation:

    Related Papers:

  • This empirical study examines the importance of ESG (Environmental, Social, and Governance) ratings in the context of US stocks returns, utilizing Sustainalytics' ESG risk score serving as a crucial metric. ESG-related news is initially used for selecting firms, followed by a secondary screening process based on Sustainalytics’ ESG Risk Scores. Eighteen firms, initially characterized by higher ESG risk but later improving their ESG risk scores, underwent comprehensive individual and holistic event studies in the US stock market. The results revealed a minor impact at the individual level but a significant collective influence. Additionally, six firms initially with lower ESG risk but deteriorating risk scores were also examined, but other external factors potentially influenced the outcome. Understanding the influence of ESG ratings on financial performance is critical for investors, legislators, and corporate decision-makers as the emphasis on sustainable investing grows. The research findings have the potential to impact investment strategies and corporate practices, contributing to a deeper understanding of the emerging landscape of responsible and sustainable finance.