“Our findings are consistent with the hypothesis that changes in ESG scores neither affect a firm’s opportunity cost of capital for new investment projects nor relax financing constraints, although firms behave as if the changes in ESG ratings (particularly environmental scores) change the relative prices of issuing different types of securities.”

[COMMENTARY] This is a unique study on the effects of changing ESG ratings on a firm’s behaviour.
Is ESG a Sideshow? ESG Perceptions, Investment, and Firms’ Financing Decisions, by Roman Kräussl (Bayes Business School), Joshua Rauh (Stanford), and Denitsa Stefanova (University of Luxembourg). May 27, 2025, Harvard Law School Forum on Corporate Governance, USA.