Does ESG Performance Enhance Financial Resilience During Crises? Evidence from the COVID-19 Shock
Article Sidebar
Main Article Content
Abstract
This study investigates whether environmental, social, and governance (ESG) performance predicts stock market resilience during the COVID-19 crisis. Using a firm-level panel of 71 S&P 500 companies from 2018 to 2021, we examine the relationship between pre-crisis ESG scores and annual stock returns, controlling for firm-specific financial characteristics and market-based risk indicators such as beta and volatility. Fixed-effects panel regressions reveal no significant relationship between aggregate ESG scores and stock performance during the crisis. However, the environmental dimension, when interacted with the crisis period, shows a negative association with returns—suggesting that ESG leadership may not always offer downside protection during systemic shocks. Robustness checks confirm these findings across alternative specifications. These results highlight the importance of integrating ESG efforts with broader risk management strategies to strengthen financial resilience. The paper offers empirical insights for investors, firms, and regulators seeking to evaluate the crisis-time financial relevance of ESG performance.
Article Details
Section
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
How to Cite
References
Ariyudha PPK, Rokhim R (2024) Corporate Resilience During the Covid-19 Pandemic: the Role of ESG Performance and Financial Flexibility. Matrik : Jurnal Manajemen, Strategi Bisnis dan Kewirausahaan : 1, doi: 10.24843/MATRIK:JMBK.2024.v18.i01.p01
Bodhanwala S, Bodhanwala R (2023) Environmental, social and governance performance: influence on market value in the COVID-19 crisis. Management Decision 61(8): 2442–2466, doi: 10.1108/MD-08-2022-1084
Broadstock DC, Chan K, Cheng LTW, Wang X (2021) The role of ESG performance during times of financial crisis: Evidence from COVID-19 in China. Finance Research Letters 38: 101716, doi: 10.1016/j.frl.2020.101716
Capelle-Blancard G, Petit A (2019) Every Little Helps? ESG News and Stock Market Reaction. Journal of Business Ethics 157(2): 543–565, doi: 10.1007/s10551-017-3667-3
Cardillo G, Bendinelli E, Torluccio G (2023) COVID‐19, ESG investing, and the resilience of more sustainable stocks: Evidence from European firms. Business Strategy and the Environment 32(1): 602–623, doi: 10.1002/bse.3163
Demers E, Hendrikse J, Joos P, Lev BI (2020) ESG Didn’t Immunize Stocks Against the Covid-19 Market Crash. SSRN Electronic Journal , doi: 10.2139/ssrn.3675920
Demers E, Hendrikse J, Joos P, Lev B (2021) ESG did not immunize stocks during the COVID‐19 crisis, but investments in intangible assets did. Journal of Business Finance & Accounting 48(3–4): 433–462, doi: 10.1111/jbfa.12523
Dong W (2024) Analysis of the Impact of ESG Performance on Financial Market Stability from the Perspective of Multivariate Statistical Models. Journal of Electrical Systems 20(3): 1002–1010, doi: 10.52783/jes.3427
Dong L, Deng S, Gao Q (2024) A Study on the Relationship Between ESG Performance and Stock Returns – Take A-share Listed Company Stocks as the Example. In: Li X, Yuan C, Kent J (eds), Proceedings of the 7th International Conference on Economic Management and Green Development. Applied Economics and Policy Studies. Springer Nature Singapore, Singapore, pp 1274–1284, doi: 10.1007/978-981-97-0523-8_119
Gao M, Geng X (2024) The role of ESG performance during times of COVID-19 pandemic. Scientific Reports 14(1): 2553, doi: 10.1038/s41598-024-52245-7
Hsu TJ, Huang AY (2024) On the resilience of US ESG stocks: Evidences from the COVID-19 market crashes. Economics Letters 235: 111532, doi: 10.1016/j.econlet.2024.111532
Iannone B, Duttilo P, Gattone SA (2025) Evaluating the resilience of ESG investments in European Markets during turmoil periods. arXiv, , doi: 10.48550/ARXIV.2501.03269
Kim D, Yoon SJ (2024) The impact of ESG ratings on corporate value during COVID-19 pandemic: evidence from China and South Korea. Journal of Derivatives and Quantitative Studies: 선물연구 32(3): 223–237, doi: 10.1108/JDQS-03-2024-0015
Lee D, Park RS (2023) The Effect of ESG Performance on Stock Price Resiliency and Volatility in Korea: Evidence from COVID-19 Pandemic. Korean Journal of Financial Studies 52(5): 677–709, doi: 10.26845/KJFS.2023.10.52.5.677
Li Z, Feng L, Pan Z, Sohail HM (2022) ESG performance and stock prices: evidence from the COVID-19 outbreak in China. Humanities and Social Sciences Communications 9(1): 242, doi: 10.1057/s41599-022-01259-5
Lin Y, Lu Z, Fan D, Zheng Z (2024) The bright and dark sides of ESG during the COVID-19 pandemic: evidence from China hospitality industry. International Journal of Contemporary Hospitality Management 36(4): 1393–1417, doi: 10.1108/IJCHM-11-2022-1384
Lu J, Rodenburg K, Foti L, Pegoraro A (2022) Are firms with better sustainability performance more resilient during crises? Business Strategy and the Environment 31(7): 3354–3370, doi: 10.1002/bse.3088
Luo J (2023) How ESG Disclosure Affects the Stock Price Crash Risk. Advances in Economics, Management and Political Sciences 38(1): 208–214, doi: 10.54254/2754-1169/38/20231914
Ma T (2024) Relationship Between ESG Scores and Stock Performance after the COVID-19 Crisis. Advances in Economics, Management and Political Sciences 125(1): 84–92, doi: 10.54254/2754-1169/2024.17791
Manaf S, Mukhyi MA, Veronica D, Ahyar M, Timisela SI (2024) Corporate Financial Management, Risk Assessment, and Investment Strategies: Analyzing Their Effects on Business Sustainability. Global International Journal of Innovative Research 2(6): 1407–1414, doi: 10.59613/global.v2i6.195
Meier JH, Lipkow N, Paientko T (2024) Stock Market Performance in the Face of External Shocks. Does ESG Compliance Immunize Against the Pandemic? Zeszyty Teoretyczne Rachunkowości 48(2): 129–144, doi: 10.5604/01.3001.0054.6244
Moalla M, Dammak S (2023) Corporate ESG performance as good insurance in times of crisis: lessons from US stock market during COVID-19 pandemic. Journal of Global Responsibility 14(4): 381–402, doi: 10.1108/JGR-07-2022-0061
Mohdari M, Noor M, Elliyana E (2025) Integrating Green Management and Economic Development: The Role of Esg Strategies in Regional Sustainability. Journal of Production, Operations Management and Economics (51): 78–92, doi: 10.55529/jpome.51.78.92
Moutinho R, Silva RLMD (2024) ESG investments in the Covid-19 pandemic: were there superior financial and shareholder performances? Revista Catarinense da Ciência Contábil 23: e3430, doi: 10.16930/2237-7662202434302
Naffa H, Dudás F (2023) Does ESG Improve Crisis Resilience? Empirical Evidence of Global Emerging Equity Markets during the Covid-19 Crisis. Periodica Polytechnica Social and Management Sciences 32(1): 17–27, doi: 10.3311/PPso.19147
Olorunyomi TD, Titilope Tosin Adewale, Theodore Narku Odonkor (2021) Advancing sustainability accounting: A unified model for ESG integration and auditing. International Journal of Science and Research Archive 2(1): 169–185, doi: 10.30574/ijsra.2021.2.1.0021
Padilla‐Rivera A, Hannouf M, Assefa G, Gates I (2025) Enhancing environmental, social, and governance, performance and reporting through integration of life cycle sustainability assessment framework. Sustainable Development 33(2): 2975–2995, doi: 10.1002/sd.3265
Rubbaniy G, Khalid AA, Ali S, Naveed M (2021) Are ESG Stocks Safe-Haven during COVID-19? SSRN Electronic Journal , doi: 10.2139/ssrn.3779430
Wang K, Yu S, Mei M, Yang X, Peng G, Lv B (2023) ESG Performance and Corporate Resilience: An Empirical Analysis Based on the Capital Allocation Efficiency Perspective. Sustainability 15(23): 16145, doi: 10.3390/su152316145
Xu N, Chen J, Zhou F, Dong Q, He Z (2023) Corporate ESG and resilience of stock prices in the context of the COVID-19 pandemic in China. Pacific-Basin Finance Journal 79: 102040, doi: 10.1016/j.pacfin.2023.102040
Xu S, Li H, Chen J, Huo J, Kuang X (2024) Sustainable competitiveness through ESG performance: An empirical study on corporate resilience. Journal of Competitiveness , doi: 10.7441/joc.2024.03.03
Yadav A, Asongu SA (2025) The Role of ESG Performance in Moderating the Impact of Financial Distress on Company Value: Evidence of Wavelet‐Enhanced Quantile Regression With Indian Companies. Business Strategy and the Environment 34(3): 2782–2798, doi: 10.1002/bse.4118
Yahya H (2023) The role of ESG performance in firms’ resilience during the COVID-19 pandemic: Evidence from Nordic firms. Global Finance Journal 58: 100905, doi: 10.1016/j.gfj.2023.100905
Yang S (2023) Long-term Business Sustainability Through Corporate Governance. Advances in Economics, Management and Political Sciences 19(1): 255–262, doi: 10.54254/2754-1169/19/20230146
Yang X, Shi Y (2024) Optimising Corporate Financial Performance Through ESG Integration Faced by Climate Change. Advances in Economics, Management and Political Sciences 128(1): 1–10, doi: 10.54254/2754-1169/2024.18252
Zhou C, Wang K, Liu R, Shu A, Wang D (2024) Impact of ESG ratings on Chinese market performance during the COVID-19 crisis. Journal of Accounting Literature , doi: 10.1108/JAL-05-2024-0095
Zouaghi F, García Marco T, Garcia M (2023) Mitigating the Impact of Environmental Practices on Firm Financial Distress Amidst the Covid-19 Pandemic: Insights from Emerging and Developed Economies. SSRN, , doi: 10.2139/ssrn.4600162