How Does Firms ESG Investment Play a Moderating Role Between Climate Variability Risk and Enterprise Worth?

In light of the Sustainable Development Goals, businesses are progressively integrating environmental, social, and governance (ESG) factors in their investment planning. Scholars, investors, and politicians frequently examine climate variability risk (CVR) impact on enterprise worth (EW), how certain investing techniques mitigate this impact. In order to investigate these patterns, we quantify the impact of CVR on EW by analyzing data from 1720 US-listed companies throughout 2005 to 2020. To accomplish our goal, we apply GMM approach to consider the regression estimations. The following are our primary findings: Initially, CVR has a substantial detrimental impact on EW. However, enterprise worth is positively and considerably impacted by ESG investments. Similarly, the link between CVR and EW moderated in part by ESG investments. We verify that our estimations hold up well under different methodological conditions. Finally, this study presents a novel viewpoint on risk management with important policy ramification for US managers, investors, and regulators. We contend that US corporations need to use firms ESG investing as a key strategic driver.