Innovation reveals ESG-related vulnerabilities in companies, suggesting stress-testing may inform risk assessment.
The article provides an innovation and brand new algorithm of assessing the impact of ecologic and social factors of sustainable development on economic indicators of the company. Methodology and mathematic model elaborated on the basis of leading Russian companies can help identify correlating links between ecologic and social indicators of sustainable development and economic results of work. To understand the cause-and-effect relations between finance and ESG-figures the author proposed to use the method of stress-testing with different scenario conditions. As a result of stress-testing and modeling the target function behavior it is possible to find individual critical values of ecologic and social ESG-indicator for every company. Research findings allow us to identify company vulnerability to different ESG-risks and borders of risk tolerance. They can also be used to inform investors and other concerned parties about risks connected with ESG-factors.
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O. V. Devyatkin (2025) studied this question.
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