We examine whether environmental, social and governance (ESG) scores of European banks impact on their risk-taking behavior and on bank value. We find that high ESG scores are associated with a modest reduction in risk-taking for banks that are high or low risk-takers, and that the impact is conditional on executive board characteristics. These findings are consistent with the “stakeholder” view of ESG activities. However, high ESG scores are also associated with a reduction in bank value consistent with the “overinvestment” view of ESG whereby scare resources are diverted from investment. The decline in bank value occurs notwithstanding a positive indirect link between ESG scores and bank value through their impact on risk taking. Our results are robust to different measures of risk and value and to alternative estimation methodologies, and the key results hold for each of the sub-components of the ESG score. We conclude that there is a trade-off between reducing bank risk-taking and a more stable financial system on the one hand and bank value on the other.