Image credit: AI-generated illustration.

It may not be the downgrade itself that does the most damage, but the gap between investor expectations and reality. 

New research from Murdoch Business School academics Dr Phu Ngoc Tran, Dr Ariful Hoque and Dr Thi Le reveals that ESG downgrades trigger the strongest share price declines when investors have previously held highly optimistic views of a company. The findings show that sustainability performance is not just a reporting issue. It shapes market confidence, corporate reputation and investment decision-making. 

As businesses, investors and policymakers navigate an increasingly complex sustainability landscape, this research highlights the importance of transparency, trust and consistent ESG performance. It is an important contribution to the conversation on responsible business practices and demonstrates how Murdoch Business School research is helping inform industry thinking and societal impact. 

🔗 Read full story here: Study: ESG downgrades hurt optimistic investors most