Analysis of ESG information-disclosure strategies considering different risk-appetite investors

In response to the investment market and public, over 1,000 Chinese listed companies have started to provide environment, society, and governance (ESG) information of their own accord till 2022. How to develop an effective ESG information disclosure mechanism is important for providers of reliable external financing. Here, we designed a risk-management model to describe providers’ information disclosure strategy decisions under different risk-appetite investors, and analyse how information effectiveness, the information sensitivity and risk aversion of investors, and rating agency accuracy affect optimal ESG information-disclosure strategies. We found that: (1) Providers adopt appropriate under-disclosure strategies that can reduce their information collection and disclosure costs, thus maximising the benefits of ESG information disclosure; (2) Investors’ information sensitivity and risk aversion will affect the space for enterprises to adopt under-disclosure strategies; (3) More professional rating agencies can provide stronger credit backing for ESG information, prompting providers to reduce disclosure information.