This study investigates how firm-, sector-, and country-level ESG performance influences dividend payout propensity among European non-financial firms, with particular emphasis on firm resilience to ESG-related risks measured by the ESG controversies score.
The study addresses three research gaps by examining dividend payout propensity instead of payout level, adopting a micro–meso–macro ESG framework, and employing the ESG controversies score as a proxy for companies’ resilience to ESG-related risks.
The analysis uses an unbalanced panel of 321 non-financial STOXX Europe 600 firms covering 2010–2024. Logistic regression models estimate the effects of firm-, sector-, and country-level ESG performance, complemented by robustness tests using alternative financial control variables.
Firm-level ESG performance consistently increases dividend payout propensity. Sector-level ESG performance shows a weaker, context-dependent effect, while country-level ESG performance loses significance in the comprehensive model, indicating that corporate ESG resilience predominates over broader sustainability context.
The study extends ESG–dividend literature by introducing a multi-level sustainability framework and shifting attention from payout magnitude to payout propensity. It also demonstrates the usefulness of ESG controversies score as an alternative indicator of corporate ESG performance.
The findings suggest that effective ESG-related risk management strengthens firms’ credibility and supports dividend decisions. Managers should integrate ESG resilience into financial strategy, while policymakers may enhance policy effectiveness by promoting sector-specific ESG frameworks alongside national sustainability initiatives.