Environmental, social and governance reporting in annual reports: A textual analysis. Issue 3 (26th June 2020)

• Record Type: Journal Article
• Authors: Baier, Philipp; Berninger, Marc; Kiesel, Florian
• Is Part Of: Financial markets, institutions and instruments. Volume 29:Issue 3(2020)
• Page Start: 93
• Page End: 118
• Publication Date: 2020-06-26
• Subjects: Content analysis -- Environment -- ESG -- Governance -- Investor communication -- Social -- Sustainability measurement -- Textual analysis; Financial services industry -- Periodicals; Securities industry -- Periodicals; Financial instruments -- Periodicals; Financial institutions -- Periodicals; 332.105
• DOI: 10.1111/fmii.12132
• Languages: English
• ISSNs: 0963-8008

Abstract

Abstract: Considering environmental, social, and governance (ESG) factors becomes increasingly important for companies and investors. However, "ESG" is not clearly defined so far and, therefore, it is difficult to measure the ESG activity of companies. We analyze the extent and changes in 10‐K reports and proxy statements on ESG, using a textual analysis and creating an ESG dictionary. The results show an average of 4.0 % ESG words on total words in the reports. The ESG word list with 482 items can be used to quantitatively examine the extent of ESG reporting, which will be helpful especially for SRI investors. Our classification of 40 subcategories allows a highly granular analysis of different ESG related aspects. Moreover, indications for a relation between changes in reporting and real events, especially negative media presence, are detected. Regulatory bodies have to be aware of the use of such words and how they are used.