The Role of ESG in Corporate Risk Management: A Literature Review
DOI:
https://doi.org/10.54518/fid.1.2.2023.1222Keywords:
Corporate, Environmental, Social, and Governance, Risk, Risk Management, SustainabilityAbstract
Environmental, Social, and Governance (ESG) has emerged as an important approach to enhancing corporate sustainability and resilience in an increasingly complex business environment. This study aims to analyze the role of ESG in corporate risk management through a literature review approach. The research employed a qualitative method by examining scientific articles and academic publications published over the last five years. The analysis process involved identifying, selecting, evaluating, and synthesizing relevant literature addressing the relationship between ESG and corporate risk. The findings indicate that ESG implementation contributes to reducing various forms of risk, including operational, reputational, regulatory, and financial risks. Furthermore, each ESG dimension demonstrates a distinct contribution to risk mitigation. The environmental dimension appears to have a more consistent influence on enhancing corporate stability compared to the social and governance dimensions. The study also identifies inconsistencies in previous research findings, mainly due to differences in ESG measurements and risk indicators. The findings suggest that ESG should not only be viewed as a sustainability instrument but also as a strategic component of corporate risk management systems that support organizational stability and long-term sustainability.
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