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Geopolitical risk and ESG rating divergence: Global evidence

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  • Huo, Xuehui
  • Shi, Haiquan

Abstract

ESG is a crucial factor in evaluating firms. However, ESG rating divergence is a common phenomenon, and its triggers have not been fully explored. Utilizing a global sample of firms from 47 countries, this article sheds light on the implication of geopolitical risk for ESG rating divergence. The findings show that geopolitical risk substantially facilitates ESG rating disparities. This effect is larger in countries with higher corruption and lower media freedom. The results are sound to various endogeneity tests. Overall, this paper, by providing novel insights into the relation between geopolitical risk and ESG rating divergence, contributes to finance literature.

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  • Huo, Xuehui & Shi, Haiquan, 2025. "Geopolitical risk and ESG rating divergence: Global evidence," Finance Research Letters, Elsevier, vol. 86(PB).
    • Handle: RePEc:eee:finlet:v:86:y:2025:i:pb:s1544612325017374
    DOI: 10.1016/j.frl.2025.108483
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