The Role of National Culture in ESG Risk Management: Empirical Evidence From STOXX Europe 600

ABSTRACT This study investigates the role of national culture in influencing firms' Environmental, Social, and Governance (ESG) risk management. Anchored to institutional theory, the research focuses on Hofstede's national cultural dimensions (power distance, individualism, long‐term orientation, and uncertainty avoidance) as factors associated with firms' ESG risk management. The empirical analysis relies on a panel dataset of firms belonging to the STOXX Europe 600 index, covering the period from 2018 to 2023. The findings highlight that power distance, individualism, and uncertainty avoidance have a significant effect on ESG risk management. Moreover, the analysis investigates the moderating role of firms' profitability, showing that return on assets (ROA) shapes the strength of the relationship between these determinants and ESG risk management. This study contributes to the literature on firm risk management by identifying both direct and moderating mechanisms that influence ESG risk management. The research offers theoretical contributions and practical implications for firms, policymakers, and ESG‐focused investors in managing ESG risks.