Financial Sanctions and ESG
6th Annual Conference of the Academy of Sustainable Finance, Accounting, Accountability & Governance, İstanbul, Türkiye, 19 - 21 Haziran 2026, ss.57, (Özet Bildiri)
- Yayın Türü: Bildiri / Özet Bildiri
- Basıldığı Şehir: İstanbul
- Basıldığı Ülke: Türkiye
- Sayfa Sayıları: ss.57
- Bilecik Şeyh Edebali Üniversitesi Adresli: Evet
Özet
This study examines whether firms increase their ESG engagement when their home countries are
subject to financial sanctions and investigates the firm-level conditions under which this response
becomes stronger or weaker. Using a global panel of firms and a measure of U.S. financial
sanctions, the analysis evaluates the association between sanctions and overall ESG performance
as well as its environmental, social, and governance pillars. The findings indicate that financial
sanctions are associated with a positive increase in firm-level ESG scores. This pattern suggests
that firms may use ESG as a strategic instrument to protect legitimacy, reassure stakeholders, and
differentiate themselves from the adverse country-level environment created by sanctions. To
explore the mechanisms underlying this response, the study further examines heterogeneity across
financial constraints, risk, cash holdings, and international exposure. The results show that the
positive sanctions–ESG association is weaker among firms facing severe financial constraints and
among firms with lower cash holdings, indicating that resource availability shapes firms’ capacity
to respond. By contrast, the effect is stronger among riskier firms, particularly in overall ESG and
governance, suggesting that financially vulnerable firms face stronger incentives to adopt ESG-
related signalling strategies under sanctions. The analysis also shows that internationally structured
firms, especially those with foreign incorporation, exhibit a stronger ESG response.