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3. ESG and Credit Risk

  • 2025
  • OriginalPaper
  • Chapter
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Abstract

This chapter delves into the complex interplay between Environmental, Social, and Governance (ESG) performance and credit risk, an area that has seen limited research compared to ESG's impact on equity. The text highlights a significant gap in the literature regarding the relationship between ESG and debt capital, particularly focusing on credit risk. It begins by defining credit risk and exploring its assessment through ratings and valuation models. The chapter then discusses the potential for debt investors to exert pressure on companies regarding ESG activities due to the shorter maturities of debt capital. It also reviews previous empirical studies on ESG and credit risk, summarizing their findings and methodologies. The text concludes by deriving hypotheses for further research, emphasizing the need for a deeper understanding of how ESG performance influences credit risk. Readers will gain insights into the current state of research, the methods used to assess credit risk, and the potential implications of ESG performance on debt financing.

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Title
ESG and Credit Risk
Author
Anna Gappmaier
Copyright Year
2025
DOI
https://doi.org/10.1007/978-3-658-49090-4_3
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