Climate risk increasingly affects the performance and long-term resilience of European companies, as climate change has become a significant source of economic uncertainty. Climate-related disruptions (e.g., extreme weather events, rising temperatures, etc.) influence all types of businesses; however, European firms differ substantially in their capacity to withstand and adapt to these challenges. In this context, the present doctoral research will examine whether European companies that have implemented Environmental, Social and Governance (ESG) framework have successfully mitigated their vulnerability to climate risk and achieved more effective economic and environmental performance compared with those that do not adopt corresponding environmental frameworks. Although ESG has become an essential component of modern corporate strategic planning, it remains largely untested regarding its effectiveness in mitigating climate risk. Using firm-level data from European companies, this research also seeks to provide empirical evidence on the mechanisms through which climate risks translate into economic costs, as well as the extent to which the adoption of sustainable business practices enhances corporate adaptability to climate-related challenges. The findings are expected to support companies, investors and policymakers in developing strategies that strengthen the competitive position of the European economy while simultaneously promoting sustainability.