IMPORTANCE OF ENVIRONMENTAL, SOCIAL AND GOVERNANCE DISCLOSURES (ESG) FOR SUSTAINABLE DEVELOPMENT

Abstract

In contemporary times, the global focus on Environmental, Social, and Governance (ESG) information disclosure has intensified, prompting a heightened emphasis on companies' divulgence of ESG-related data. This shift is rooted in the escalating significance of ESG information for both investors and stakeholders, facilitating well-informed judgments regarding investment choices and corporate affiliations. Through ESG disclosure, firms can showcase their dedication to sustainability and societal accountability, thereby cultivating a favorable reputation and drawing increased investor interest. In conjunction with the financial data presented for investor assessment, this disclosure grants stakeholders’ comprehensive insights. Access to such information bolsters a company's pursuit of its primary business objective, characterized by the maximization of shareholder wealth as measured by the highest common stock market prices. Previous researches indicate heightened ESG disclosure scores correlate with better operational performance and firm value, fostering consistent long-term returns. Collectively, the act of ESG information disclosure has emerged as a pivotal determinant of success within the contemporary business milieu. This practice enables companies to underscore their commitment to sustainability and social responsibility, magnetizing investor interest, and procuring a competitive edge in the commercial arena.