Recherche FFJ Research Statement Yuki KUBO TANAKA


The consequences of corporate ESG disclosure

Yuki Kubo Tanaka, Hosei University



This project examines how stakeholders: investors, shareholders, creditors etc. value corporate ESG disclosures. In addition to this, it will be also investigated whether corporate behavior has been substantially changed by engagement with stakeholders. This project will serve its research objectives by collecting disclosed information, questionnaire surveys, and interview surveys with institutional investors and data vendors. Verification of specific hypotheses is carried out by empirical analysis. Today, not only financial information but also non-financial information has a great influence on corporate value. This project should give suggestions for. This survey should provide suggestions to stakeholder, system setters and companies who disclosing ESG information.

Research Motivation

Today, many companies are becoming more willing to engage in ESG activities and disclose their results. By disclosing ESG information, every company is appealing to stakeholders its long-term and sustainable value enhancement. Companies that disclose only statutory financial information are becoming a minority.

On the other hand, the costs incurred by companies for new disclosures are also not negligible. In Japan these days, an event has occurred in which this becomes apparent. When the market category of the Tokyo Stock Exchange began to change in April 2022, several companies dared to select lower section (called “standard”) (Nikkei Shimbun; 2022). Companies have stated that the reason for this was to avoid the cost of disclosing climate change information required for higher section (called “primes”).

Until now, efforts to reflect environmental and social perspectives in corporate business activities have been carried out based on the two axes of strengthening the disclosure system and the positive evaluation by the capital market for such a disclosure.

However, as the content of disclosure expands in response to the demands of institutional investors and the tightening of hard-law policy is strengthened, some companies may feel burdened with disclosure and try to avoid it (like the Japanese companies mentioned above). Also, whether institutional investors really understand and utilize vast amounts of ESG information is controversial, including skeptical views (Berg et al.; 2022).

The original purpose of a series of disclosure systems is to create corporate behavior that improves society. Companies have the power to make the future of society worse, but they also have the power to make it better. For the disclosure system to achieve this goal, the two things must be verified. First, how stakeholders evaluate ESG information. Seconds, whether corporate behavior has changed substantially through engagement with stakeholders. This project explores these two points by collecting disclosure information, questionnaire surveys, and interview surveys.

Research targets are both of funder and sell-side analyst. This project will utilize and arrange the questionnaire by E&Y(2021). They surveyed how institutional investors chose and evaluate corporate’s ESG information (for example, the most interested question, "which the following issues compromise the usefulness of ESG disclosure?" - The lack of information on how the company creates long-term value. - The disconnect between ESG reporting and mainstream financial information, etc.). Some questions about data-venders will be added because there is concern that investors are not looking directly at corporate disclosures and may be relying on data vendors (If this assumption is the fact, the market value may not reflect the real corporate ESG performance).

Via this project, I would like to interview a few people each from the investment side and disclosure side. I plan to interview not only companies and investors, but also ESG consultants, media professionals, and academics.

Literature Review

Various studies have been conducted on the relationship between ESG information disclosure and corporate value. Clarkson et al. (2013) showed that there is no relationship between environmental information disclosure and the cost of capital, while Plumlee et al. (2015) showed a positive relationship between voluntary disclosure of environmental information and the cost of capital. In a related study, Li et al. (2018) showed a positive relationship between disclosure of ESG information and corporate value measured by Tobin's Q, while Fatemi et al. (2018) argued that there was a negative relationship between the disclosure of ESG information and the corporate value measured by Tobin's Q. Lins et .al (2017) also argued that companies with high social capital calculated by ESG activities will give higher returns during the Lehman shock. In addition, focusing on the risk of a stock price plunge, ESG has the effect of mitigating the stock price plunge (Kim et al. (2014), Lu and Nakajima (2016)). According to Friede et al. (2015), who surveyed various research results, about 2,200 related empirical studies have been conducted since the 1970s, and about 90% of the papers are not negative in the relationship between ESG and corporate value. Nonetheless, the conclusions are mixed.

Utilization of ESG information by investors

As a matter of fact, the number of analysts who use ESG information is increasing, and global sustainable investment is also increasing. The latest aggregate from Global Sustainable Investment Review is $ 35,301 billion, 35.9% of all assets under management.

ESG investment methods are also evolving to include broader concepts such as risk and opportunity, as well as traditional evaluation axes such as ethics and values. According to a survey conducted by Amel-Zadeh & Serafeim (2017) on major institutional investors around the world, the most traditional method of ESG investment is "negative screening" (Excluding specific businesses such as weapons and alcohol from the portfolio) is still major. However, many respondents are already skeptical of this approach and consider it to be the least savory approach. They answered that they would shift their focus to such investment methods: "ESG integration" that systematically incorporates a wider range of ESG factors into the investment process, and "engagement" in which asset owners themselves engage in dialogue with investees to bring about changes in the ESG factors of investees. In 2022, this tendency is becoming more prominent.

According to Ioannou & Serafeim (2015) – which investigated the relationship between the evaluation of sell-side analysts and the CSR scores of evaluated companies over the 15 years from 1993 to 2007, analysts in the early 90s were tendency to make pessimistic recommendations for companies with high CSR scores. However, in recent years, analyst recommendations for such companies have become less negative and eventually turned into more optimistic ones.

They said that analysts in the early 90s interpreted CSR as a strategy to meet the expectations of stakeholders other than shareholders and saw it as an agency cost that would destroy the property of shareholders. As CSR practices progressed, CSR was accepted by both companies and analysts as a future risk mitigation strategy. In fact, according to a CFA Institute (2015) survey, “managed investment risk” (63% of respondents) is the number one reason portfolio managers and research analysts use ESG information to make investment decisions.

The current concern is that even if engagement and ESG integration are considered appropriate ESG investment strategies, it will take time to outperform traditional portfolios. According to a State Street survey (Eccles1 and Kastrapeli; 2017), 43% of asset managers say it takes more than five years for ESG investments to outpace traditional portfolios. However, less than 20% used these timeframes. There are also other concerns about a "green wash" in which companies try to hide bad news by disclosing ESG information.

Expected contribution

This survey should provide the following suggestions.

First, this project provides implications for institutional setters. Since the ESG information disclosure system is scheduled to continue to be developed this year, it is possible to verify how the current disclosure system is used and utilize it for the construction of a new system. For example, the EU is expected to set disclosure requirements for the Corporate Sustainability Reporting Directive: CSRD in mid-2022. Once this is decided, listed companies and large companies will be required to disclose information on sustainability from 2024. Internationally, The FSB Task Force on Climate-related Financial Disclosures: TCFD has promoted the development of climate change information disclosure systems in developed countries, and in June 2021, this natural capital version of TNFD: Taskforce on Nature-related Financial Disclosures has been launched. At the earliest, the first be-ta version flamework will be published in 2022 1Q.

This project will also be useful to stakeholders. If the green wash is confirmed, stakeholders will need to change the way how they evaluate ESG information. And this project also brings suggestions to the companies that make disclosures. Therefore, this is because it is possible to know whether the information disclosed by the company is perceived by stakeholders as the long-term and sustainable value of the company, as the company expected.


Amel-Zadeh, A. and Serafeim, G., (2018) “Why and How Investors Use ESG Information: Evidence from a Global Survey.” Financial Analysts Journal 74(3): 87-103.

Berg, F. and Kölbel, J. and Rigobon, R. (2019) “Aggregate Confusion: The Divergence of ESG Ratings” Available at SSRN: Sep. 2022)

CFA Institute (2015). Environmental, Social and Governance (ESG) Survey.

Clarkson, Peter M., Xiaohua Fang, Yue Li, and Gordon Richardson. (2013) “The Relevance of Environmental Disclosures: are such Disclosures Incrementally Informative?” Journal of Accounting and Public Policy 32(5): 410-431.

Eccles, R. G. and Kastrapeli, M. D. (2017) “The Investing Enlightenment. How Principle and Pragmatism Can Create Sustainable Value through ESG” (Accessed Sep. 2022)

E&Y(2021) “2021 EY Global Institutional Investor Survey” (Accessed Sep. 2022)

Fatemi, A, Glaum, M. and Kaiser, S. (2018) “ESG Performance and Firm Value: The Moderating Role of Disclosure,” Global Finance Journal 38: 45–64.

Friede, G., Busch, T., & Bassen, A. (2015) “ESG and Financial Performance: Aggregated Evidence from more than 2000 Empirical Studies.” Journal of Sustainable Finance and Investment 5(4): 210-233.

Ioannou, I. and Serafeim, G. (2015) “The Impact of Corporate Social Responsibility on Investment Recommendations: Analysts' Perceptions and Shifting Institutional Logics,” Strategic Management Journal 36(7): 1053-1081.

Kim, Y., H. Li, and S. Li. (2014) “Corporate Social Responsibility and Stock Price Crash Risk,” Journal of Banking and Finance 43, pp.1-13.

Li, Y., Gong, M., Zhang, X., Koh, L. (2018) “The Impact of Environmental, Social, and Governance Disclosure on Firm Value: The Role of CEO Power,” The British Accounting Review 50(1): 60-75.

Lins, K. V., Servaes, H. and Tamayo, A. (2017) “Social Capital, Trust, and Firm Performance: The Value of Corporate Social Responsibility during the Financial Crisis,” The Journal of Finance 72(4); 1785-1824.

Lu K., Nakajima, M. (2016) “ESG and Risk of Stock Price Decline”, Securities Analyst Journal 54 (7): 26-38.

Nikkei Shimbun (2022) “TSE reorganization: Will the market revive? Increased corporate value from signboards. Re-questioning the significance of listing” 13 Jan. 2022, 1p.

Plumlee, M., Brownb, D., M.Hayesa, R. and Marshallb, R. S., (2015) “Voluntary Environmental Disclosure Quality and Firm Value: Further Evidence.” Journal of Accounting and Public Policy 34(4): 336-361.