Divergence and Uncertainty in ESG Markets: Metrics, Economic Policy, and Financial Implications

Divergence and Uncertainty in ESG Markets: Metrics, Economic Policy, and Financial Implications

Fecha: 2025
Juan Ignacio Peña, Kurt A. Desender y Bing Guo

Estudios de la Fundación. Serie Economía y Sociedad, nº 106

Sumario

• PART I. Decoding Environmental Scores: Divergence Across Data Providers
  • Resumen ejecutivo
  • Executive Summary
  • Abstract
    • 1. Introduction
    • 2. Related literature
    • 3. Methodology
    • 4. Data
      • 4.1. Data on Environmental Performance
      • 4.2. Financial Statement Data
      • 4.3. Stock prices, volatility, board characteristics, and credit rating data
      • 4.4. Variables construction
    • 5. Results
      • 5.1. Hypothesis 1a and 1b
      • 5.2. Hypothesis 2
      • 5.3. Hypothesis 3
    • 6. Conclusions
  • References

• PART II. Policy Uncertainty, Shocks, and ESG Risk: Implications for the Cost of Equity
  • Resumen ejecutivo
  • Executive Summary
  • Abstract
    • 1. Introduction
    • 2. Related literature and theoretical positioning
    • 3. Empirical strategy and hypotheses
      • 3.1. The baseline model
      • 3.2. Hypotheses: Explanatory Variables and Expected Impacts
    • 4. Data and construction of stakeholder-relevant variables
      • 4.1. Data on Environmental Performance
      • 4.2. Financial Statement Data
      • 4.3.  Cost of equity, stock prices, volatility, board characteristics, and credit rating data
      • 4.4. Uncertainty Index
      • 4.5. Variable construction
    • 5. Results: ESG signals, policy uncertainty, and cost of equity
      • 5.1. Average ESG Scores, ESG Dispersion, and Political Uncertainty
      • 5.2. Firm Characteristics: Corporate Governance
      • 5.3. Specific Events and ESG Scores
    • 6. Conclusions
  • References

• PART III. When Finance Meets Sustainability: Assessing the Economic and Environmental Returns of EU ESG Reforms
  • Resumen ejecutivo
  • Executive Summary
  • Abstract
    • 1. Introduction
    • 2. Evaluation of Green Finance Policies in the European Union: Impacts, Effectiveness, and Future Directions
      • 2.1. EU Green Bond Standard
      • 2.2. NextGenerationEU Green Bonds
      • 2.3. Impact on Business Financing Costs
      • 2.4. Role in Attracting Sustainable Investment
      • 2.5. Mitigating Financial Uncertainty
      • 2.6. Evidence on Expected Results
        • 2.6.1. Environmental Impact
        • 2.6.2. Economic Impact
        • 2.6.3. Actual Investment financed by Sovereign Green Bonds
        • 2.6.4. Challenges and Limitations
      • 2.7. Policy Analysis and Recommendations
        • 2.7.1. Effectiveness Analysis
        • 2.7.2. Recommendations
        • 2.7.3. Discussion
    • 3. The 2025 European Union Regulatory Framework on the Comparability of Environmental, Social, and Governance (ESG) Ratings
      • 3.1. Issues 
      • 3.2. Background: The EU Regulatory Framework for ESG Ratings
        • 3.2.1. Overview of Regulation (EU) 2024/3005
        • 3.2.2. Context and Rationale of Regulation (EU) 2024/3005
        • 3.2.3. Impact on Comparability of ESG Ratings
          • 3.2.3.1. Evidence of Enhanced Comparability
          • 3.2.3.2. Limitations in Achieving Full Comparability
          • 3.2.3.3. Assessment 
    • 4. The Theory and Evidence of the Impact of ESG Policies on Financing Costs
      • 4.1. Theoretical Trade-Offs
      • 4.2. Empirical Evidence
      • 4.3. Discussion 
    • 5. The Role of ESG Policies, Tax Incentives, and Green Financing in Enhancing Corporate Financing Conditions During Economic Crises
      • 5.1. ESG Policies and Their Relevance in Crises
      • 5.2. Tax Incentives and Green Financing Mechanisms
      • 5.3. Economic Policy and Financing Conditions
      • 5.4. Policy Recommendations
      • 5.5. Interactions with Macro-Financial Conditions
      • 5.6. Discussion 
    • 6. Conclusions
  • References