The Evolution of ESG Reports and the Role of Voluntary Standards

64 Pages Posted: 23 Sep 2022 Last revised: 27 Aug 2023

Date Written: August 11, 2023


We examine how Environmental, Social, and Governance (ESG) reports evolved over time and market forces that are related to this evolution. Relying on industry-specific voluntary standards that define financially material ESG issues, we train a machine learning algorithm to quantify the content in ESG reports and find that firms increase the disclosure of financially material ESG issues over time. We use a staggered difference-in-differences approach around the introduction of these standards and find a significant increase in material disclosures after the release. Firms participating in the standard setting process had high levels of material disclosures prior to the release of those standards, whereas firms not involved in this process increased material disclosures following the issuance of the standards. Overall, our findings support the claim of ESG reports as a source of financially material information and provide valuable insights into the influence of market forces in advancing corporate transparency.

Keywords: ESG Reports, SASB, Voluntary Disclosure, Textual Analysis, Topic Modelling

JEL Classification: M14, M40

Suggested Citation

Rouen, Ethan and Sachdeva, Kunal and Yoon, Aaron, The Evolution of ESG Reports and the Role of Voluntary Standards (August 11, 2023). Available at SSRN: or

Ethan Rouen (Contact Author)

Harvard Business School ( email )

Soldiers Field
Boston, MA 02163
United States
617-495-6275 (Phone)


Kunal Sachdeva

Rice University - Jesse H. Jones Graduate School of Business ( email )

6100 South Main Street
P.O. Box 1892
Houston, TX 77005-1892
United States


Aaron Yoon

Northwestern University - Department of Accounting Information & Management ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

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