Kolokas, DimitriosVeredas, David2024-05-132024-05-132021http://hdl.handle.net/20.500.12127/7461We have all heard about the urgency of shifting towards more sustainable business practices. Though large, mainly listed, companies have been under the scrutiny of regulators, customers, and media, a society cannot make the sustainability transition without the active involvement of SMEs. Today, SMEs in Europe count for more than 60% of value-added. However, ESG (Environmental, Social, and corporate Governance) transformation might be expensive, uncertain, and has a long-term nature. Hence, it is important for SMEs to understand that ESG practices not only benefit society but their resilience as well We measure resilience in terms of credit risk, and this is the first study that sheds light on this topic by analysing the impact of ESG performance on the credit risk of 350 Belgian SMEs. We find that, indeed, on average, investing in sustainability pays off as SMEs become more credit-worthy. In addition, the decrease of credit risk due to an increase of the least resilient SMEs’ ESG performance is also dependent on their liquidity. This study has been conducted by the Centre for Sustainable Finance at Vlerick Business School, and it has been financed by our partner ABN Amro Belgium.enABN AmroCentre for Sustainable FinanceESGSustainability226780181874