The Impact of ESG reporting on corporate performance in BRICS Economies

This study investigates the relationship between environmental, social, and governance (ESG) disclosure scores and firm performance in the context of BRICS nations (Brazil, Russia, India, China, and South Africa). As ESG factors gain prominence in decision-making, particularly among investors focused on sustainable investing, this research aims to provide insights into how ESG disclosures influence financial and market performance. The study analyzes data from 254 non-financial listed companies across BRICS nations from 2011 to 2023, sourced from Thomson Reuters’ Refinitiv Eikon database. Using generalized method of moments (GMM) techniques, the findings reveal a significant positive impact of ESG disclosure scores on financial performance, measured by return on assets (ROA) and return on equity (ROE). Conversely, ESG disclosure scores table a significant negative impact on market performance, measured by closing price and Tobin’s Q. This research contributes to the limited empirical evidence on ESG disclosure and firm performance in emerging markets, offering valuable insights for investors, policymakers, and corporate leaders aiming to enhance long-term financial resilience and societal impact through sustainable business practices. The study underscores the importance of ESG integration in achieving sustainable development, particularly in economies that collectively represent over 41% of the global population, 24% of global GDP, and 16% of world trade.