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Environmental, social and governance reporting in annual reports: A textual analysis

Author

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  • Philipp Baier
  • Marc Berninger
  • Florian Kiesel

Abstract

Considering environmental, social, and governance (ESG) factors becomes increasingly important for companies and investors. However, “ESG” is not clearly defined so far and, therefore, it is difficult to measure the ESG activity of companies. We analyze the extent and changes in 10‐K reports and proxy statements on ESG, using a textual analysis and creating an ESG dictionary. The results show an average of 4.0 % ESG words on total words in the reports. The ESG word list with 482 items can be used to quantitatively examine the extent of ESG reporting, which will be helpful especially for SRI investors. Our classification of 40 subcategories allows a highly granular analysis of different ESG related aspects. Moreover, indications for a relation between changes in reporting and real events, especially negative media presence, are detected. Regulatory bodies have to be aware of the use of such words and how they are used.

Suggested Citation

  • Philipp Baier & Marc Berninger & Florian Kiesel, 2020. "Environmental, social and governance reporting in annual reports: A textual analysis," Financial Markets, Institutions & Instruments, John Wiley & Sons, vol. 29(3), pages 93-118, August.
    • Handle: RePEc:wly:finmar:v:29:y:2020:i:3:p:93-118
    DOI: 10.1111/fmii.12132
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    4. Chao Li & Alexander Ryota Keeley & Shutaro Takeda & Daikichi Seki & Shunsuke Managi, 2025. "ESG Tendencies From News Investigated by AI Trained by Human Intelligence," Business Strategy and the Environment, Wiley Blackwell, vol. 34(2), pages 1880-1895, February.
    5. Ante, Lennart & Saggu, Aman, 2025. "Quantifying a firm's AI engagement: Constructing objective, data-driven, AI stock indices using 10-K filings," Technological Forecasting and Social Change, Elsevier, vol. 212(C).
    6. Ferjančič, Urša & Ichev, Riste & Lončarski, Igor & Montariol, Syrielle & Pelicon, Andraž & Pollak, Senja & Sitar Šuštar, Katarina & Toman, Aleš & Valentinčič, Aljoša & Žnidaršič, Martin, 2024. "Textual analysis of corporate sustainability reporting and corporate ESG scores," International Review of Financial Analysis, Elsevier, vol. 96(PB).
    7. Se‐Hee Jeong & Jeong‐Ji Han & Soyoung Jun & Shawn Kim & Jong Woo Kim, 2025. "Investor Responses to ESG News Sentiment: Exploring Differential Effects and Industry Moderation," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 32(3), pages 3944-3964, May.
    8. Ying Wang & Mingsheng Li & Amina Kamar, 2022. "Environmental Concerns and Impression Offsetting: New Evidence on Dividend Payout," Financial Markets, Institutions & Instruments, John Wiley & Sons, vol. 31(2-3), pages 87-118, July.
    9. Preuss, Susanne & Max, Malte M., 2024. "Do firms put their money where their mouth is? Sociopolitical claims and corporate political activity," Accounting, Organizations and Society, Elsevier, vol. 113(C).

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