Is ESG Disclosure worth the effort?

Sammanfattning: Undoubtedly the interest in business sustainability has an upward sloping trend. This has led to an enhanced level of investment into this research field. Nonetheless, the research has mainly circulated sustainability measures for larger enterprises and neglected growth companies. In fact, these companies represent 50-60% of all value creation and represent 99% of all corporations within the OECD countries. Neither has a topic-relevant industry comparison been performed. Therefore, a quantitative examination of 113 companies, in three different sectors, during a four-year period, has been conducted where the analysis was aimed at ESG disclosure performance rather than actual ESG performance. It has investigated whether ESG disclosure performance and usage of sustainability reporting frameworks affect stock price and financial performance for growth companies listed on the NASDAQ First North Growth Market Sweden. Additionally, a sector comparison was performed to detect potential differences between industries. The study found a weak but significant positive correlation between ESG disclosure performance and stock price performance. However, the relationship diminished in a portfolio setting even though a clear positive trend for utilizing an ESG rolling portfolio strategy was discovered, but statistically insignificant. From an industry perspective, the Retail & Consumer Packed Goods and Industrial sector showed significant results, while the Health Care business did not. Sustainability framework utilization positively correlated with share price for the Retail & Consumer Packed Goods industry but not for the general market. Although the results, in general, are modest, they are still a valuable contribution to the literature as they provide a more nuanced picture of the investigated relationships.