Impact of Environmental, Social, and Governance (ESG) Scores on International Credit Ratings: A Sectoral and Geographical Analysis

Ioannis Passas (), Dimitrios I. Vortelinos, Christos Lemonakis, Voicu D. Dragomir and Stavros Garefalakis
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Ioannis Passas: Department of Business Administration and Tourism, Hellenic Mediterranean University, 71004 Heraklion, Greece
Dimitrios I. Vortelinos: Department of Accounting and Finance, Hellenic Mediterranean University, 71004 Heraklion, Greece
Christos Lemonakis: Department of Management Science and Technology, Hellenic Mediterranean University, 71004 Heraklion, Greece
Voicu D. Dragomir: Department of Accounting, Auditing, and Management Information, Bucharest University of Economic Studies, 010371 Bucharest, Romania
Stavros Garefalakis: Department of Management Science and Technology, University of Western Macedonia, 50100 Kozani, Greece

Sustainability, 2025, vol. 17, issue 21, 1-29

Abstract: This study examines the relationship between environmental, social, and governance (ESG) scores and credit ratings across regions and industrial sectors using a dataset of 188 companies from Europe and the US (2013–2023). Employing ordered probit regression and Granger causality tests, the analysis reveals that, in Europe, higher ESG scores—particularly in human rights and governance—are associated with lower credit ratings, while in the US, resource use and shareholder engagement positively influence credit ratings. Sector-specific effects highlight the importance of environmental performance in healthcare and controversy management in consumer sectors. These findings emphasize the need for region- and sector-specific approaches when integrating ESG factors into credit risk assessments.

Keywords: ESG scores; credit ratings; accounting; geographic regions; industrial sectors; ordered probit model (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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