Sustainability value and firm value: Real strategies or communication?

The aim of this study is to analyze two different sustainability scores (ESG performance score and ESG disclosure score), in order to explore their different effect on firm value. The absence of a standard for measuring the impact of non-financial performance on companies leaves to existent measures an important discretionary power to the company. As a result, each corporation could use the advantage of information asymmetry to give benefits to financial performance, even through greenwashing. In particular, analyzing European listed companies through IV-2SLS analysis and a robustness check with POLS we found a general positive and significant relationship between the two ESG scores and firm value. Overall, our findings underlined that a simultaneous study of the two ways to consider ESG shows that the ESG disclosure score has a bigger impact on firm value than the ESG performance score, boasting a higher magnitude.