Stopping or Continuing to Follow Best Practices in Terms of ESG during the COVID-19 Pandemic? An Exploratory Study of European Listed Companies

This study aims to examine the effect of the COVID-19 pandemic on environmental, social, and governance (ESG) performance for European listed companies. The purpose of this study is to understand if and how the COVID-19 pandemic outbreak influenced the behavior of European companies in terms of best practices in ESG. In this paper, we consider the ESG score as a proxy of management practices. The ESG score was collected for all companies included in the STOXX 600 index (from the Refinitiv Eikon database) and analyzed using fixed and random effects. The sample is composed of 600 European listed companies and covers the period from 2018 to 2021. The results show that even in a health crisis with economic repercussions for the whole world, companies have continued to increase their commitment to ESG targets. The results are robust, also considering the different components of the ESG score (environment, social, governance) individually. This paper validates the significance for companies to improve their ESG performance even during unstable times. Our analysis has implications from several perspectives, adding supplementary information and considerations to the uncompleted debate examining the effects of external shocks on ESG performance.