ESG Practices and Corporate Risk: Evidence from Romanian Listed Companies

In the last decade, there has been an increased interest in disseminating non-financial information in corporate reporting. Their relevance derives from the significant influence they exert on the decisions of investors and external users. Research in the field demonstrates the existence of correlations between investments made in the environmental, social and governance (ESG) area and financial elements. In order to strengthen their economic performance and competitive position, they must take into account corporate risks and ways to mitigate them. The general objective of this study is determined to measure the ESG risk score of companies listed on the Bucharest Stock Exchange in Romania, which influences corporate risk. The financial and non-financial data processed consider the period 2022-2024. The results indicate a positive relationship between ESG risk score and the three components of risk: systematic, unsystematic and volatility risk, providing valuable insight into how sustainability practices can contribute to strengthening corporate risk management strategies. The research provides useful benchmarks for understanding financial risks in relation to the degree of sustainable responsibility assumed by the companies included in the research sample.