A explorative analysis on the impact of ESG and ESG ‘s controversies on corporate performance

This study aims to analyze the impact of ESG and controversies scores on idiosyncratic volatility of firm performance in the energy sector. The current study to exame the relationship between ESG, Controversy, and Volatility, considering the contextual differences and regulatory practices. In particular seeks to answer the following critical research questions: Does ESG score affect the idiosyncratic operating volatility? Does the controversy score affect idiosyncratic operating volatility? Is the legal system (common law or civil law) a driver of linkages between ESG, controversies and the firm's risk? We investigate our hypotheses on the energy sector, which is generally more exposed to the same ESG variables. The energy sector is strongly responsible for carbon emissions into theatmosphere globally due to using sources mainly of fossil origin, such as coal, gas, and oil. It alone explains the strong interest among investorsin ESG compliance of companies operating in the energy industry.