Recent findings provide evidence that companies highly rated in terms of Environmental, Social, and Governance (ESG) score report higher excess returns and lower volatility, this being supported by the assumption that ESG factors are considered, by market agents, as a good proxy for firms’ financial soundness. The aim of this paper is to investigate how ESG components affect stock returns. We use a two-step methodology to analyze the performance of companies included in the Eurostoxx50 index over the 2010–2018 period according to their ESG score. To classify companies in terms of ESG commitments, we combine several ESG indicators (quantitative ratings, scorings and qualitative-opinions) collected on a monthly basis. Our results do not support previous evidence; the Eurostoxx50 companies’ performance does not seem to be affected by their efforts in terms of ESG commitments.

Environmental issues have a considerable impact in all economic sectors, also influencing financial markets. As a result, environmental, social, and governance (ESG) awareness is rising in the financial sector. In this perspective, the concept of circular economy (CE) assumes central relevance. The aim of our study is to investigate the relationship between CE strategies and market performance; to this end, we use ESG scores as a proxy for CE. Our initial assumption is that since CE is a component of the “E” factor—in that it can generate positive and measurable environmental impacts—then it can be associated with the ESG score. Therefore, we can methodologically overcome the lack of a specific score related to CE. We use a preselection model based on historical performance by verifying the percentages of the presence of stocks in the two selected indices, namely ESG Euro Stoxx 50^® and Euro Stoxx 50-ESG. Overall, we find that ESG profiles have a positive impact on stock performance, although ESG scores do not express higher performance per se. Furthermore, our analysis shows that, to date, there is no evidence that CE initiatives can influence stock returns.

The purpose of this paper is to study the impact of environmental, social, and governance (ESG) practices on banks’ reputation and market performance. In particular, we aim to analyse whether banks adopting ESG-compliant practices can reduce their reputational damage due to financial sanctions and increase their market performance. In order to demonstrate the effect of banks’ ESG practices in reducing reputational damage due to financial penalties imposed by supervisors for breaches of regulatory requirements, we analyze a sample of 21 banks — selected because of the availability of information on sanctions imposed by the supervisory authorities — by applying a pre-selection model based on the trend of historical returns. With reference to the selected sample, we verify the percentage of securities characterized by different levels of sanctions and different ESG scores. Overall, we find that ESG aspects have a positive impact on stock performance, although higher ESG scores do not, per se, mean a lower probability of sanctions. Differing from previous research, our study, by focusing on financial sanctions, provides useful insights concerning the ESG impact on both market performance and reputational aspects.

The aim of this paper is to provide evidence on the effectiveness of the current state support mechanism incentive adopted by the Italian government in the wind market. In particular, this paper intends to investigate the effectiveness of the auction mechanism as an incentive tool for renewable sources as required by the transposition of Directive 2009/28/EC. In order to demonstrate the economic and financial feasibility of a typical wind-sector investment, we performed a scenario analysis (Monte Carlo simulation) determining a 52,500 Net Present Value (NPV) by varying the key underlying variables of the investment. The results show that with the mechanism currently in place the percentage of positive leveraged NPV is approximately equal to 70%. Despite the state contribution provided through the “Feed-in tariff” mechanism, the profitability of wind projects is not always successful, and this problem could be amplified by the slowness of the authorization procedures. The article offers prime reflections for scholars and policy makers who have long been committed to promoting sustainable development and important considerations on the introduction of further incentive models.

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