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Archive » February 2025 » The role of Esg performances in corporate risk assessment: an analysis on the cost of debt at the worldwide level

The role of Esg performances in corporate risk assessment: an analysis on the cost of debt at the worldwide level

Simone Boccaletti, Gianluca Gucciardi
February 2025 - n. 2
Keywords: Esg, Costo del debito, finanza aziendale, gestione finanziaria, sostenibilità
Jel codes: G24, G30, G32

This paper investigates the relationship between environmental, social, and governance (Esg) practices and the cost of debt for non-financial firms. Using a dataset spanning 16 years and approximately 4,800 companies worldwide, our study reveals a negative relationship between Esg performance and cost of debt, confirmed both through panel regressions and using instrumental variable models (2Sls). These results are particularly relevant following the Paris Agreement and reveal the significant effect in countries with higher CO2 emissions per capita and lower alignment with the Sdgs. Our study highlights the strategic importance of integrating Esg practices for companies and provides practical implications for financial institutions, stressing the need to incorporate Esg factors into a holistic risk assessment.

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