This study investigates the impact of Environmental, Social, and Governance (ESG) initiatives on corporate default risk, utilizing a panel dataset of non-financial firms across 20 European countries from 2008 to 2022. While previous research has predominantly explored the relationship between ESG practices and firm value, the link between ESG dimensions and corporate risk remains underexamined. Using the Generalized Method of Moments (GMM) approach, our findings reveal a statistically significant negative relationship between ESG initiatives and default risk, particularly in industries with low environmental impact. We also uncover a novel non-linear relationship between financial transparency, a key component of governance, and default risk, where moderate levels of transparency minimize insolvency risk. The study provides new empirical insights, highlighting the importance of ESG initiatives in corporate risk management, particularly in enhancing access to capital and fostering long-term financial stability. Additionally, the research carries key policy implications for regulators, investors, and corporate managers, emphasizing the importance of robust sustainability frameworks and transparent governance practices.