Impact of ESG reporting on firm performance

This study investigates the influence of ESG (Environmental, Social, and Governance) reporting on firm performance, specifically focusing on key financial metrics and carbon intensity. Utilizing a cross-sectional and time series dataset spanning from 2018 to 2022 and encompassing a diverse sample of firms across various industries, the primary aim is to assess the impact of ESG reporting
on financial performance indicators such as Return on Assets (ROA), Return on Equity (ROE), and Tobin's Q, while also examining its association with carbon intensity. The findings suggest a nuanced relationship between ESG reporting and firm performance. While a positive albeit weak correlation is noted between ESG reporting and ROE (r = 0.051), a stronger and moderately positive relationship
is observed with Tobin's Q (r = 0.425). However, the association between ESG reporting and carbon
intensity appears positive yet weak (r = 0.185), indicating limited efficacy in reducing carbon emissions. Further investigation into the moderating effect of industry yields insignificant results (F = 0.04). Despite limitations including the dataset's limited time frame and unaccounted variables, this research contributes to the understanding of ESG reporting's impact on financial and environmental
metrics. Theoretical implications emphasize the necessity for a nuanced understanding of ESG reporting's linkages with financial performance and industry dynamics, while managerial insights suggest tailoring ESG strategies to optimize corporate sustainability initiatives. Future research should extend the time frame of analysis, delve into industry-specific nuances, and explore potential
mediation or moderation effects for deeper insights into the complex relationship between ESG reporting and firm performance.