How Hurricanes Shape Corporate Esg Performance: Business Responsibility and Performance Under Natural Disasters

With climate change, the frequency and intensity of natural disasters continue to increase, posing significant challenges to the operation and development of businesses. Focusing on hurricanes in the United States, we explore how corporate ESG performance responds to major natural disasters. We find that major hurricane seasons have an adverse impact on ESG performance, and the decline in ESG scores occurs immediately after disaster shocks and gradually increases. In addition, the magnitude of disasters’ impact on ESG performance is positively associated with the severity of the losses incurred. By comparing firms with different characteristics, we find that firms with disaster experience and higher liquidity are less affected by hurricane seasons, while firms with larger asset sizes are more influenced. Further analysis suggests that natural disasters also have an adverse impact on financial metrics such as R&D expenses, investment intensity, stock prices, corporate value, and cash flow.