EXAMINING ESG DISCLOSURE PRACTICES AND FIRM PERFORMANCE IN THE FOOD AND BEVERAGES INDUSTRY

A CONTENT ANALYSIS APPROACH

Abstract

 The relationship between ESG disclosure and firm performance has recently gained significant attention. ESG disclosure provides transparency and accountability to stakeholders. It enables them to evaluate a company's performance in crucial environmental, social, and governance areas, facilitating informed decision-making and enforcing corporate responsibility. This study examines the effect of Environmental, Social, and Governance (ESG) disclosure on firm performance. Using a random sampling technique of the subsector Food and Beverages industry from the Main Market Bursa Malaysia, the final sample consisted of ten firms in 2021. This study used content analysis to measure ESG disclosure, while the financial data were gathered from the annual report. It was found that ESG disclosure is positively and significantly associated with short-term performance, as measured by the Return on Assets (ROA). This implies that firm investment in ESG and better disclosure can attract investors and increase short-term performance. However, insignificant associations were found between ESG disclosure and Tobin Q. Furthermore, firm size is negatively significant with ROA, while firm leverage is positively significant with long-term performance (Tobin Q). This study adds substantial evidence of ESG disclosure's effect on firm performance in the food and beverages industry. This paper offers evidence on ESG disclosure and firm performance using content analysis based on the FTSE Russell ESG rating methodology. ESG disclosure benefits firms by enhancing reputation, access to capital, risk management, and operational efficiency while benefiting society through environmental stewardship, social impact, stakeholder engagement, and long-term economic stability. It promotes ethical business conduct that considers different stakeholders’ needs and fosters sustainable development for a better future. Further, by integrating ESG into fundamental business practices, firms could contribute to a more sustainable future and foster long-term business resilience.