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ESG and Sustainability Finance: Addressing Climate Change and Climate Risk
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ESG and Sustainability Finance: Addressing Climate Change and Climate Risk

A special issue of Journal of Risk and Financial Management (ISSN 1911-8074). This special issue belongs to the section "Energy and Environment: Economics, Finance and Policy".

Deadline for manuscript submissions: 31 December 2025 | Viewed by 4536

Special Issue Editors

Dr. Zifeng Feng

E-Mail Website
Guest Editor
Department of Economics and Finance, Unversity of Texas at El Paso, El Paso, TX 79958, USA
Interests: commercial real estate; real estate; corporate finance; ESG
Dr. Mingzhi Hu

E-Mail Website
Guest Editor
School of Management, Chinese Academy of Housing and Real Estate, Zhejiang University of Technology, 288 Liuhe Road, Xihu District, Hangzhou 310014, China
Interests: housing economics; urban economics; entrepreneurship
Special Issues, Collections and Topics in MDPI journals

Special Issue Information

Dear Colleagues,

The concepts of Environmental, Social, and Governance (ESG) and Sustainability are rapidly transforming financial research and practice. ESG factors are now integral to corporate strategy, investment decisions, and regulatory frameworks, fostering long-term value, mitigating risks, and promoting societal well-being. However, ESG integration also presents challenges such as greenwashing, inconsistent disclosures, and debates over financial payoffs. There is a pressing need for comprehensive research that examines both the benefits and downsides of ESG in financial markets and business operations, particularly in the context of climate change, climate risk, and natural disasters.

The Journal of Risk and Financial Management invites submissions for a Special Issue on “Environmental, Social, and Governance (ESG) and Sustainability Finance: Addressing Climate Change, Climate Risk, and Natural Disasters”. We seek high-quality theoretical, empirical, and methodological studies that advance our understanding of ESG integration in finance with a focus on climate-related challenges. The topics of interest include, but are not limited to, the following:

  • ESG Disclosure, Performance, and Financial Outcomes: Impact of ESG disclosure and performance on corporate financial results and potential payoffs;
  • ESG Risk Assessment and Management: Strategies for assessing and managing ESG-related risks, including those related to climate change and natural disasters, in investment portfolios;
  • Comparative ESG Practices: Analysis of ESG implementation across different industries and regions, with an emphasis on climate resilience;
  • Green Finance and Sustainable Investments: Role of ESG in advancing green finance initiatives and sustainable investment strategies aimed at mitigating climate impact;
  • ESG Reporting Standards and Regulations: Examination of ESG reporting standards, regulatory frameworks, and their implications for climate risk management;
  • Behavioral Finance and ESG Investing: Insights into investor behavior and decision making in ESG investments, particularly in response to climate-related information;
  • ESG and Financial Stability: Influence of ESG factors, especially climate risks, on financial stability and market resilience;
  • Corporate Sustainability Strategies: Best practices for enhancing corporate sustainability and climate resilience in diverse economic environments;
  • Downsides of ESG: Issues such as greenwashing, inconsistent ESG disclosure, and debates over the actual financial benefits of ESG integration, with a focus on climate-related aspects.

Submissions should address significant challenges and propose innovative solutions at the intersection of ESG, sustainability, and finance, particularly in relation to climate change and the associated risks. Both theoretical insights and practical applications are encouraged.

Dr. Zifeng Feng
Dr. Mingzhi Hu
Guest Editors

Manuscript Submission Information

Manuscripts should be submitted online at www.mdpi.com by registering and logging in to this website. Once you are registered, click here to go to the submission form. Manuscripts can be submitted until the deadline. All submissions that pass pre-check are peer-reviewed. Accepted papers will be published continuously in the journal (as soon as accepted) and will be listed together on the special issue website. Research articles, review articles as well as short communications are invited. For planned papers, a title and short abstract (about 100 words) can be sent to the Editorial Office for announcement on this website.

Submitted manuscripts should not have been published previously, nor be under consideration for publication elsewhere (except conference proceedings papers). All manuscripts are thoroughly refereed through a single-blind peer-review process. A guide for authors and other relevant information for submission of manuscripts is available on the Instructions for Authors page. Journal of Risk and Financial Management is an international peer-reviewed open access monthly journal published by MDPI.

Please visit the Instructions for Authors page before submitting a manuscript. The Article Processing Charge (APC) for publication in this open access journal is 1400 CHF (Swiss Francs). Submitted papers should be well formatted and use good English. Authors may use MDPI's English editing service prior to publication or during author revisions.

Keywords

  • environmental, social, and governance ESG
  • performance ESG
  • disclosure ESG
  • payoff financial stability and ESG
  • sustainability
  • sustainable investing
  • corporate sustainability
  • green finance
  • greenwashing
  • climate change
  • climate risk
  • natural disasters

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Published Papers (3 papers)

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Research

26 pages, 737 KB  
Article
Forecast Bias in Analysts’ Initial Coverage: The Influence of Firm ESG Disclosures
by Mohammadali Fallah, Sulei Han and Le Zhao
J. Risk Financial Manag. 2025, 18(10), 585; https://doi.org/10.3390/jrfm18100585 - 15 Oct 2025
Viewed by 573
Abstract
This study examines analyst forecast bias during the initial coverage of a firm using a sample of 631,660 firm-quarter analyst forecasts from 2007 to 2022. Estimating OLS regressions with firm, analyst, and time fixed effects, we find that analysts’ initial EPS forecasts are [...] Read more.
This study examines analyst forecast bias during the initial coverage of a firm using a sample of 631,660 firm-quarter analyst forecasts from 2007 to 2022. Estimating OLS regressions with firm, analyst, and time fixed effects, we find that analysts’ initial EPS forecasts are closer to the consensus than ongoing coverage forecasts. Our results suggest that ESG considerations influence analysts’ initial assessments of the firm. Higher ESG disclosure scores attenuate this tendency to issue consensus-aligned forecasts, particularly for analysts with a more favorable assessment of the firms than the consensus. We observe this effect when EPS forecast dispersion is high, indicating that ESG disclosures influence analysts’ initial assessments when uncertainty and disagreement among analysts are high. Our findings are robust to restricting the sample to small brokerage firms where analyst coverage assignments are more likely to be exogenous. We also find that analysts issue more optimistic price target estimates for firms with higher ESG disclosure scores. Full article
(This article belongs to the Special Issue ESG and Sustainability Finance: Addressing Climate Change and Climate Risk)
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25 pages, 1665 KB  
Article
Navigating the Green Frontier: Dynamic Risk and Return Transmission Between Clean Energy ETFs and ESG Indexes in Emerging Markets
by Mariem Bouzguenda and Anis Jarboui
J. Risk Financial Manag. 2025, 18(10), 557; https://doi.org/10.3390/jrfm18100557 - 2 Oct 2025
Viewed by 676
Abstract
This study is designed to investigate the dynamic risk transmission processes between clean energy ETFs and ESG indices in the BRICS countries—Brazil, India, China, and South Africa—while excluding Russia due to the lack of consistent data availability during the study period, which coincides [...] Read more.
This study is designed to investigate the dynamic risk transmission processes between clean energy ETFs and ESG indices in the BRICS countries—Brazil, India, China, and South Africa—while excluding Russia due to the lack of consistent data availability during the study period, which coincides with the Russia–Ukraine conflict. The analysis is conducted on daily data obtained from DataStream, spanning from 27 October 2021 to 5 January 2024. By applying a time-varying parameter vector autoregression (TVP-VAR) modeling framework, we considered examining the global market conditions and economic shocks’ effects on these indices’ interconnectedness, including COVID-19 and geopolitical tensions. In this context, clean energy ETFs turned out to stand as net shock transmitters throughout volatile market spans, while ESG indices proved to act as net receivers. Moreover, we undertook to estimate both of the minimum variance and minimum connectedness portfolios’ hedging efficiency and performance. The findings highlight that introducing clean energy indices into investment strategies helps boost financial outcomes while maintaining sustainability goals. Indeed, the minimum connectedness portfolio consistently delivers superior risk-adjusted returns across varying market circumstances. In this respect, the present study provides investors, regulators, and policymakers with practical insights. Investors may optimize their portfolios by integrating clean energy and ESG indexes, useful for achieving financial and sustainability aims. Similarly, regulators might apply the findings to establish reliable green investment norms and strategies. Thus, this work underscores the crucial role of dynamic portfolio management in optimizing risk and return in the globally evolving green economy. Full article
(This article belongs to the Special Issue ESG and Sustainability Finance: Addressing Climate Change and Climate Risk)
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24 pages, 791 KB  
Article
Herding Behavior, ESG Disclosure, and Financial Performance: Rethinking Sustainability Reporting to Address Climate-Related Risks in ASEAN Firms
by Ari Warokka, Jong Kyun Woo and Aina Zatil Aqmar
J. Risk Financial Manag. 2025, 18(8), 457; https://doi.org/10.3390/jrfm18080457 - 16 Aug 2025
Viewed by 2078
Abstract
This study examines the intersection of environmental, social, and governance (ESG) disclosure (operationalized through sustainability reporting), corporate financial performance, and the behavioral dynamics of herding in capital structure decisions among non-financial firms in five ASEAN countries. As ESG and sustainability finance gain prominence [...] Read more.
This study examines the intersection of environmental, social, and governance (ESG) disclosure (operationalized through sustainability reporting), corporate financial performance, and the behavioral dynamics of herding in capital structure decisions among non-financial firms in five ASEAN countries. As ESG and sustainability finance gain prominence in addressing climate change and climate risk, understanding the behavioral factors that relate to ESG adoption is crucial. Employing a quantitative approach, this research utilizes a purposive sample of 125 non-financial firms from Indonesia, Malaysia, the Philippines, Singapore, and Thailand, gathered from the Bloomberg Terminal spanning 2018–2023. Managerial Herding Ratio (MHR) is used to assess herding behavior, while Sustainability Report Disclosure Index (SRDI) measures ESG disclosure. Partial Least Squares Structural Equation Modeling (PLS-SEM) and Multigroup Analysis (MGA) were applied for data analysis. This research finds that while sustainability reporting enhances return on assets (ROA) and Tobin’s Q, it does not significantly relate to net profit margin (NPM). The findings also confirm that herding behavior—where companies mimic the financial structures of peers—moderates the relationship between sustainability reporting and performance outcomes, with leader firms gaining more from transparency efforts. This highlights the double-edged nature of herding: while it can accelerate ESG adoption, it may dilute the strategic depth of climate action if firms merely follow rather than lead. The study provides actionable insights for regulators and corporate strategists seeking to strengthen ESG finance as a driver for climate resilience and long-term stakeholder value. Full article
(This article belongs to the Special Issue ESG and Sustainability Finance: Addressing Climate Change and Climate Risk)
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