The Effectiveness of ESG in Risk Control: Review and Research Prospects

As companies pay more attention to ESG (environment, society, and corporate governance), they also pay more attention to controlling risks and improving corporate performance through ESG practices. This article comprehensively reviews the impact of ESG on performance through risk control mechanisms, mainly from the aspects of environmental risks and business risks. It is found that effective ESG practices can reduce corporate risks to a certain extent and improve the market competitiveness of the enterprises. However, there are still differences in research methods and conclusions in existing research. Based on the previous research, this article proposes future research directions, emphasizes the differences and regulatory effects of ESG in different industries, and shows that its mechanism of action significantly affects corporate financial performance.