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How ESG Ratings Can Affect a Firm’s Cost of Equity

Reynolds Holding

2019) , for example, strong ESG performance correlates positively with higher equity returns and a reduction in downside risk. Embracing sustainable practices may introduce new risks, such as regulatory changes, lawsuits, or reputational issues. Sussman (2019). The Journal of Finance 74 (6), 2789–2837.

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