The relevance, quality and trustworthiness of ESG information

The demand for information that informs stakeholders how companies’ activities in producing goods and services affect society through positive and negative externalities has substantially increased over the last decade. The disclosure of this information is captured by and summarized in environmental, social and governance (ESG) performance metrics. The use of ESG data and associated ratings continues to grow. However, reporting on ESG activity, both qualitatively and quantitively, differs vastly across firms. Moreover, it is highly questionable whether ESG ratings and indices accurately capture a firm’s performance on a given ESG topic. The objectives of this dissertation are to (1) document on the heterogeneity in ESG reporting, (2) identify how ESG efforts map into a firm’s financial performance and valuation and (3) investigate whether firms’ acclaimed ESG efforts are indeed reflecting their true efforts regarding sustainability.