Corporate Governance and ESG Controversies: Navigating Risk‐Taking in Banks
Nicola Del Sarto
Business Strategy and the Environment, 2025, vol. 34, issue 4, 4541-4560
Abstract:
This study examines the impact of environmental, social, and governance (ESG) controversies on bank risk, focusing on the moderating role of corporate governance. Using a dynamic panel dataset of 88 European banks from 2013 to 2020, we analyze two key risk measures: the Z‐score, indicating financial stability, and risk‐weighted assets (RWAs), reflecting risk exposure. The findings reveal that banks facing ESG controversies are exposed to heightened risk, with corporate governance playing a crucial role in moderating these effects. Strong governance structures, characterized by board diversity and independence, are found to mitigate the financial risks associated with ESG controversies, whereas weak governance amplifies these risks. Our results contribute to the growing literature on ESG and bank risk by highlighting the complexities introduced by ESG controversies and the essential role of governance in managing these risks. These insights are relevant for both academics and practitioners seeking to enhance risk management frameworks in the banking sector.
Date: 2025
References: Add references at CitEc
Citations:
Downloads: (external link)
https://doi.org/10.1002/bse.4214
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:bla:bstrat:v:34:y:2025:i:4:p:4541-4560
Ordering information: This journal article can be ordered from
http://onlinelibrary ... 1002/(ISSN)1099-0836
Access Statistics for this article
Business Strategy and the Environment is currently edited by Richard Welford
More articles in Business Strategy and the Environment from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().