This research examines how ESG performance impacts default probability (PD) in life and non-life insurance firms. Findings show that improved ESG practices reduce both short-term and long-term PD, benefiting credit ratings and financial stability. Policymakers and managers can use this to enhance risk management and sustainable finance strategies.
“... commitments to ESG might be viewed as signalling a particular approach to risk management rather than an ideologically-driven willingness to sacrifice profitability.”
“… stock market investors either do not treat the ESG score as a reliable measure of ESG performance or, embracing the “overinvestment view” rather than the “risk mitigation view” of Corporate Social Responsibility, do not associate positive ESG performance to greater corporate transparency and trustworthiness.”
Amid a surge in corporate social responsibility (CSR) communication, this study delves into the prevalence of symbolic CSR actions versus substantive efforts. Focusing on US-listed firms, it links CSR decoupling with heightened financial fraud risks. Factors like governance, audit quality, and ownership concentration amplify this vulnerability, emphasizing caution for stakeholders and regulators when assessing CSR claims.
ESG scores and climate policy uncertainty affect default risk in ESG and non-ESG firms. The study uses various metrics and machine learning models to analyze default risk over 20 years, offering policy insights for risk management in corporations and government.
Implementing Agenda 2030 and its global Sustainable Development Goals (SDGs) requires a concerted effort from institutions and the private sector. Sustainable Finance plays a crucial role in achieving this. International directives like Sustainability Reporting are shaping the landscape, emphasizing ESG criteria. This paper compares various sustainability frameworks and highlights the importance of ESG criteria for sustainability analyses and portfolio selection. It also suggests an integrated ERM framework to align sustainability with financial decisions, enhancing coherence with SDGs and facilitating cross-framework integration.
"This paper explores to what extent the regulatory strategies that were developed in ‘traditional’ financial law to support confidence in ratings and benchmarks can be exported to the ‘new’ world of ESG finance."