Effects of Environmental, Social Performance, Gender Diversity and ESG Controversies of Financial Risk

Abstract

This article aimed to analyze the effects of environmental, social, gender diversity and ESG controversies on the financial risk of Brazilian companies. Quantitative, descriptive and documentary research. The period analyzed was from 2016 to 2020, in a sample of 406 companies in an unbalanced data panel. The results demonstrate managerial implications by revealing that ESG social performance helps managers control financial risk. Therefore, the incorporation of policies aimed at improving labor, human rights, the community and its product, can act as mitigators of financial risk, since the greater the social performance of the analyzed companies, the lower the financial risk tends to be in the face of the market. of capital. The results also showed that gender diversity is positively related to financial risk, which is probably due to the highly volatile financial market context in Brazil, a low number of women on the board of directors of the companies analyzed and the differences between non-homogeneous groups. The research brings insights into the influence of social and environmental performance, gender diversity and ESG controversies on the financial risk of Brazilian companies, relations that are incipient in the Brazilian context and that motivated the realization of this study. In addition, the research contributes to organizational management, by demonstrating that ESG initiatives, more precisely social ones, must be increasingly incorporated into company strategies, given the beneficial effects of these social initiatives to reduce financial risk. Therefore, the integration of social and governance factors (female participation in boards) bring benefits to organizations and should be encouraged.