Do investors incorporate financial materiality? Remapping the environmental information in corporate sustainability reporting

Xie, Jun; Tanaka, Yoshitaka; Keeley, Alexander Ryota; Fujii, Hidemichi; Managi, Shunsuke

doi:10.1002/csr.2524

Cited by 13 publications

(2 citation statements)

References 34 publications

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“…A range of nature values, including intrinsic, option, existence, and bequest values, could not be captured by our exploratory valuation of NCPs. Third, although expressing nature contributions in a monetary way is useful to understand financial risks (Xie et al, 2023), it also poses several ethical challenges, for instance, the way nature resources can be (over)exploited to feed economic growth, or even used in corporate communication strategies to justify business-as-usual and questionable actions (e.g., Greenwashing; Roberts et al, 2023).…”

Section: Discussionmentioning

confidence: 99%

“…There is an increasing agreement on the need to create and report on NCP value, however studies and evidence in this topic are still needed (Roberts et al, 2023;Zioło et al, 2023). Additionally, despite its relevance for business viability and risk mitigation, studies and approaches incorporating financial issues with environmental information in corporate sustainability reporting are in their infancy, particularly when it comes to natural capital and nature's contributions (Xie et al, 2023). In this context, here we present a case study focused on the valuation of NCP derived from the investments of a public company from Northern Portugal: LIPOR -Municipalities Association for Sustainable Waste Management of Greater Porto.…”

Section: Introductionmentioning

confidence: 99%

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Accounting for nature contributions to people in corporate sustainability: The case of a waste management company in Portugal

Pinto,

Machado,

Nicolau

et al. 2024

Corp Soc Responsibility Env

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Nature's contributions to people (NCP) are contributions of natural capital to people's quality of life, being at the center of political and societal concern. There is an increasing recognition of businesses' responsibility toward conservation and responsible use of natural capital. In this exploratory study, we identified gains of corporate investments on natural capital, focusing on LIPOR, a waste management company that closed and converted a dumpsite into a multifunctional Urban Green Space. We gathered and reviewed available data and concluded that there are €113,020,478 in NCP benefits, from €7,760,032 business investments by LIPOR, roughly representing a positive cost–benefit ratio of 14, over 2 decades. Results suggest that well‐targeted business investments in natural capital can provide high rates of return associated with people's benefits. Our case study contributes to fulfilling a gap in business literature by deliberately linking rates of investment on natural capital with the valuation of NCP benefits.

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Section: Discussionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Accounting for nature contributions to people in corporate sustainability: The case of a waste management company in Portugal

Pinto,

Machado,

Nicolau

et al. 2024

Corp Soc Responsibility Env

View full text Add to dashboard Cite

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Common ownership and investor‐focused disclosure: Evidence from ESG financial materiality

Schiehll,

Kolahgar

2024

Bus Strat Env

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In this study, we investigate whether information demands made by common agents, specifically common institutional owners, drive firms to adopt a reporting framework that enhances the comparability and financial materiality of environmental, social, and governance information. Using a sample of 3659 unique US firms from 2015 to 2021, we collected data on the adoption of the Sustainability Accounting Standards Board's reporting framework—identifying first movers, followers, and non‐adopting firms—and their levels of common institutional ownership. Our results are robust across changes in the levels of common institutional ownership, various combinations of fixed effects, and the application of an instrumental variable approach. Our findings support the idea that investors' demand drives comparability and financial materiality in sustainability reporting and that common ownership enhances such disclosure by alleviating the concern over the proprietary costs of revealing sensitive information. Our study offers new insights into patterns of intra‐industry disclosure behavior and a better understanding of how a group of increasingly significant market participants (i.e., common institutional owners) influences firms' commitment to investor‐focused disclosure.

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How corporate climate change mitigation actions affect the cost of capital

Wang,

Shen,

Xie

et al. 2024

Corp Soc Responsibility Env

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Japan has been at the forefront of global efforts to accelerate climate change mitigation. Japanese firms have led in the development of decarbonization technologies and have positively disclosed climate change‐related information based on the Task Force on Climate‐related Financial Disclosures recommendations to address climate change. We explore the relationship between corporate climate change mitigation actions and the cost of capital for 2100 Japanese listed companies from 2017 to 2021. The results reveal that a higher carbon intensity correlates with an increased cost of equity, debt, and weighted average cost of capital. Interestingly, although climate‐related information disclosure is associated with an increased cost of debt, it concurrently lowers the cost of equity and overall capital. This research recommends strategic approaches for firms to reduce their costs of capital while proactively combating climate change, highlighting the divergent responses of equity and bond markets to decarbonization initiatives.

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Do investors incorporate financial materiality? Remapping the environmental information in corporate sustainability reporting

Cited by 13 publications

References 34 publications

Accounting for nature contributions to people in corporate sustainability: The case of a waste management company in Portugal

Accounting for nature contributions to people in corporate sustainability: The case of a waste management company in Portugal

Common ownership and investor‐focused disclosure: Evidence from ESG financial materiality

How corporate climate change mitigation actions affect the cost of capital

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