Are ESG Ratings Informative About Companies' Socially Responsible Behaviors Abroad? Evidence From the Russian Invasion of Ukraine

The Russian invasion of Ukraine revealed the limitations of ESG ratings in assessing corporate social responsibility abroad. Using data on Stoxx 600 firms’ Russian exposure, pre-invasion disclosures, and ESG scores, results show that investing in highly-rated ESG firms may be ineffective. These firms are neither more likely to exhibit socially responsible behaviors abroad nor provide better shareholder protection against stock market fallout after a geopolitical shock.