ESG scores and scandal risk: How can investors make smarter choices?

A study by researchers from Hong Kong and the UK analyzed 13,000 corporate events across 86 countries, finding that while high ESG scores reduce scandal likelihood, they amplify financial penalties during crises. Markets hold higher expectations for high-ESG companies, intensifying their impact when scandals occur.

The research challenges the notion of ESG as a "shield" and advises investors to pair ESG metrics with other risk indicators for a comprehensive risk assessment. This approach helps align sustainability goals with better risk management and investment strategies.

https://phys.org/news/2025-01-esg-scores-scandal-investors-smarter.html