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

Author

Listed:
  • Yang , Jiaqi

    (Sustainable Lab Inc.)

  • Takahashi , Kotaro

    (Sustainable Lab Inc.)

  • Yamadera, Satoru

    (Asian Development Bank)

  • Tian, Shu

    (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.

Suggested Citation

  • Yang , Jiaqi & Takahashi , Kotaro & Yamadera, Satoru & Tian, Shu, 2024. "Environmental, Social, and Governance Materiality in XBRL Disclosures and Its Performance Predictability: Evidence from Japan," ADB Economics Working Paper Series 744, Asian Development Bank.
    • Handle: RePEc:ris:adbewp:0744
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    More about this item

    Keywords

    XBRL; ESG materiality; ESG disclosure; fixed panel regression;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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