Environmental, Social, and Governance Materiality in XBRL Disclosures and Its Performance Predictability: Evidence from Japan

Jiaqi Yang (), Kotaro Takahashi (), Satoru Yamadera () and Shu Tian ()
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Jiaqi Yang: Sustainable Lab Inc.
Kotaro Takahashi: Sustainable Lab Inc.
Satoru Yamadera: Asian Development Bank
Shu Tian: Asian Development Bank

No 744, ADB Economics Working Paper Series from Asian Development Bank

Abstract: By gathering and analyzing the textual information in eXtensible Business Reporting Language format from the annual securities reports of around 3,800 Japanese listed companies from 2013 to 2023, this study aims to uncover the trend of Japanese corporate environmental, social, and governance (ESG) materiality disclosure, particularly the environmental aspects. Furthermore, this research explores the potential of self-disclosed ESG information based on eXtensible Business Reporting Language technology as an alternative source for predicting companies' sustainability and financial performance. An upward trend in environmental information disclosure was identified, suggesting a deepening corporate commitment to sustainability practices. Second, our correlation analysis indicated that E, S, and G materialities are increasingly disclosed in a unified manner rather than in isolation. Third, our analysis found limited evidence of a relationship between self-disclosed ESG materiality and corporate financial and ESG performance, which indicates that corporates’ self-disclosure of ESG materiality is not yet sufficient to use as a standalone measure to evaluate and predict financial profitability and climate performance.

Keywords: XBRL; ESG materiality; ESG disclosure; fixed panel regression (search for similar items in EconPapers)
JEL-codes: C23 M41 O16 Q56 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2024-10-09
New Economics Papers: this item is included in nep-acc, nep-cfn and nep-env
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