Estimation of Impact of ESG Practices’ Performance and Their Disclosure on Company's Value

Recently businesses began to consider different initiatives of integrating ESG activities into business decision-making process. The key initiative is maintaining non-financial reporting and performance integration when aligning value creation activities with Sustainable Development Goals (SDG's) and communicating to stakeholders. Particularly, this is true for ESG positioning of the company in the context of the ESG performance-disclosure dichotomy. The purpose of the paper is to understand what kind of ESG practices’ factors influence value of companies from oil & gas and industrials sectors of the economy in developed capital markets the most in ESG performance-disclosure dichotomy. Our sample consists of 5388 observations of oil & gas and industrials companies for the period from 2016 to 2021. The results showed that investors do not appreciate either performance or disclosure separately, but they look at the activity of the firm in complex. Therefore, the company should employ both practices in order to be sound ESG-responsible company in the eyes of the market. The conclusions of the study could be of interest to companies building an ESG strategy to increase investor loyalty and improve financial performance. As well as to potential investors to evaluate companies and build an investment strategy implementing non-financial factors into decision making process.