Energy exposure, ESG scores, and stock market resilience to geopolitical energy Shocks

ESG scores are widely used as indicators of corporate resilience, but it remains unclear whether they capture firms' vulnerability to geopolitical energy shocks. Using S and P 500 and STOXX Europe 600 constituents, this paper compares two shocks with distinct transmission channels: the Russia-Ukraine invasion, which created a European gas-cost shock, and the 2026 Hormuz disruption, which generated an oil-route shock. We distinguish accounting-based exposure, measured by revenue-scaled energy use and Scope 1 and 2 emissions, from market-implied exposure, measured by pre-event oil beta. Revenue-scaled energy use predicts significantly lower abnormal returns around the Ukraine shock, especially among European firms. Around the Hormuz shock, oil beta explains abnormal returns, whereas accounting-based energy and carbon exposure do not. ESG scores show only limited resilience-related signal in Ukraine carbon-exposure specifications. The evidence weakens when operating energy exposure is modelled directly and does not generalise to the Hormuz shock. The findings show that equity markets price geopolitical energy shocks through shock-specific exposure channels and caution against using ESG scores as stand-alone measures of energy-shock resilience.