The impact of the environmental, social and governance dimensions of sustainability on firm risk in the hospitality and tourism industry

This paper explores the relationship between adherence to corporate social responsibility goals and firm financial risk. Data on an international sample of 209 firms were collected for the period 2002 to 2022. Firm risk was proxied using stock return volatility and probability of default. The results show that the environmental performance of hospitality and tourism firms unequivocally influences firm risk, whether this risk is quantified as probability of default or volatility of stock market returns. This finding confirms that the adoption of environmentally sustainable and responsible practices is crucial not only for the environment but also for the stability of hospitality and tourism firms.