The impact of environmental, social and governance (ESG) reporting on corporate profitability: evidence from Thailand

Abstract

Purpose

The United Nations' sustainable development goals (SDGs) put together a global framework in an attempt to address environmental, social and governance (ESG) concerns. Measuring a company’s contribution to the SDGs relies heavily on ESG reporting. This paper aims to examine the impact of ESG reporting on the corporate profitability of listed companies in Thailand over the period of 2019–2021.

Design/methodology/approach

Using 147 listed firms in the ESG group, content analysis was used to quantify the ESG reporting (within 11 themes), while corporate profitability was measured by return on asset and return on equity. Descriptive analysis, correlation matrix and panel regression are used to analyze the data of this study.

Findings

Consistent with the legitimacy, stakeholder and signaling theories, the authors found a statistically significant and positive impact of ESG reporting on corporate profitability in Thailand.

Originality/value

The findings highlight the importance of incorporating ESG considerations into companies’ reporting and decision-making processes, as these can enhance firm profitability and performance, attract stakeholders, improve their competitive advantage and step toward sustainability.

Citation

Treepongkaruna, S. and Suttipun, M. (2024), "The impact of environmental, social and governance (ESG) reporting on corporate profitability: evidence from Thailand", Journal of Financial Reporting and Accounting, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JFRA-09-2023-0555