ESG Reputation Risk, Corporate Risk-Taking, and Climate Impact in Southeast Asia
Abstract
The primary objective of this study is to examine the influence of corporate risk-taking (CRT) and climate risk index (CRI) on the Reputation Risk Index (RRI). Using panel data regression analysis, the study analyzed 597 firm-year observations of non-financial firms in five Southeast Asian countries from 2021 to 2023, with robustness tests and alternative measures validating the findings.
The results indicate a significant positive relationship between CRT and RRI, suggesting that greater corporate risk-taking corresponds to higher ESG reputation risks due to intensified stakeholder scrutiny. In contrast, CRI does not significantly affect RRI, indicating that climate risks may only indirectly influence reputation. These findings emphasize the importance of aligning risk management practices with sustainability goals to mitigate ESG reputation risks.
Policymakers and corporate leaders should prioritize strategies that balance profitability with stakeholder accountability to sustain reputational standing. Incorporating ESG considerations into corporate governance is crucial for navigating evolving market and regulatory demands.
This study contributes to the literature by introducing the ESG Reputation Risk Index as a novel metric for reputation risk and exploring the underexamined context of Southeast Asian firms, enriching the discourse on ESG dynamics in emerging markets.
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DOI: https://doi.org/10.17509/jaset.v17i2.83255
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