Environmental, Social and Governance Risk versus Company Performance
Environmental, social and governance risks (ESG risks), which do not include a financial structure, are risks that are externally accepted and can directly affect the performance of the economy. The risks of ESG can cause investors to face and fight financial challenges as well as financial difficulties. Investors who plan to overcome these challenges with the least amount of damage implement various strategies to improve risk management. An investment that harms the environment creates a social risk by disturbing the ecosystem and attracting a negative public reaction. Permitting such investments creates the perception that there is a lack of governance in the society and the risk of governance arises. As can be seen, the risks of ESG are interrelated. For this reason, the chapter aims to explain the risk factors of ESG and to present suggestions to shed light on the issues for policy decision-makers.
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