A recent study shows that firms with higher ESG scores (a measure of a firms environmental, social, and governance efforts) have lower price volatility and smaller volatility spikes than firms with lower ESG scores. Given this study’s findings, what would you expect to happen to a corporation’s stock price if their ESG score significantly increases and why?

A.
Price will decrease because future cash flows will be higher

B.
Price will decrease because cash flows become less risky

C.
Price will increase because cash flows become less risky

D.
Price will increase because future cash flows will be higher