A new study from Steel City Re claims that companies implementing ESG and reputational risk strategies have seen almost-immediate effects on their stock price.
The report says that those implementing these strategies saw their stock prices go 5% above market value within two weeks, with the premium almost doubled for those that publicly shared and validated those strategies.
According to Steel City Re, the stock prices of firms that managed, validated and publicized ESG and reputation risk management strategies on average gained 9.3% over the subsequent seven months after a precipitating event, while firms in which such processes were assumed by shareholders to be in place gained 4.3%.
Nir Kossovsky, CEO of Steel City Re, said: “Investors appear to reward firms that actively manage reputational risks as operational strategies and not just potential PR problems. Our study makes the case for ESG-focused firms to take a more structured, substantive and comprehensive approach to risk governance and management.”
He added: “The data show that instituting, validating, and communicating risk management strategies can both fulfill the goals of stakeholder-centrism and meet shareholder expectations,” he added.
Meanwhile, companies that failed to institute, validate, and communicate risk management strategies reportedly lost 13.2% of their stock value over those seven-month periods and underperformed their peers by an average of 23.3%.