The impact of ESG ratings on the market performance of commodity stock sector before and during the COVID-19 pandemic
The impact of ESG ratings on the market performance of commodity stock sector before and during the COVID-19 pandemic

Summary/Abstract: Motivation: The growing importance of ESG in the international economy makes the analyzed issues extremely interesting. More and more studies show the growing role of ESG performance on company financial and market results as well as analyze the impact of the COVID-19 pandemic on the financial market. The study of the rate of return and the relationship between the largest company companies in European Union Member States is of key importance considering the investment portfolio risk. Aim: The main aim of the article is the impact assessment of ESG performance of the firm (proxied by ESG scoring by Refinitiv) on the rate of return of commodity sector companies listed on financial markets of European Union Member States. The second goal of the paper is to determine the impact of the COVID-19 pandemic on the rate of return of the analyzed companies. The third and final goal is to assess the impact of sector leader status on the rate of return of these companies (i.e. KGHM, PKN Orlen, Royal Dutch Shell and Rio Tinto). Results: ESG disclosure by the surveyed companies and ESG scoring had a negative impact on the rate of return, while E, S, and G scorings did not affect the rate of return at all. Sector leaders were less negatively impacted by the COVID-19 economic crisis than the rest of the sector; however, sector leadership status was not statistically significant. The COVID-19 pandemic positively influenced the rate of return of analyzed companies. In the case of commodities stock companies, the economic crisis caused by the pandemic brought about higher levels of uncertainty in the financial markets.

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