Professor Hidemichi Fujii Fukuoka, Japan\u2014This year marks the 20th anniversary of the Principles for Responsible Investment (PRI), launched with United Nations backing in 2006. Today, environmental, social, and governance (ESG) related non-financial information\u2014such as greenhouse gas emissions, pollution control, and diversity metrics\u2014is routinely analyzed alongside traditional financial data.<\/p>\n As companies scale up their ESG commitments, core questions remain: do these efforts create extra value, and how do they affect capital markets?<\/p>\n A study published on January 8, 2026, in \u3000Business Strategy and the Environment<\/a> offers new evidence from researchers at Kyushu University. The team finds that strengthening ESG disclosure and performance increases both a firm\u2019s intrinsic value and overall market efficiency.<\/p>\n \u201cWe focus on firms\u2019 intrinsic value, as it goes beyond short-term metrics like costs and profits to include future opportunities and risks,\u201d explains Xinyu Wang, a PhD student at Kyushu University\u2019s Graduate School of Economics and the paper\u2019s first author. \u201cThis offers a more stable measure of long-term value, which aligns with ESG\u2019s vision of sustainable value creation and a resilient global financial system.\u201d<\/p>\n Drawing on a global dataset spanning 2015 to 2022, the team analyzed 2,636 firms across 31 countries on six continents. The sample included companies from manufacturing, raw materials, services, ICT, and other sectors.<\/p>\n To assess intrinsic value, the researchers applied the Residual Income Model (RIM), which incorporates a company\u2019s book value and excess earnings. Based on this, they calculated misvaluation, as the ratio of intrinsic value to market capitalization, capturing how far stock prices deviate from their true worth.<\/p>\n The findings confirm that stronger ESG disclosure and performance correspond to higher intrinsic value, with ESG performance having a larger effect than disclosure alone.<\/p>\n \u201cThese results align with our theoretical analysis,\u201d says Wang. \u201cFor instance, signaling theory suggests that ESG disclosure reduces information asymmetry and perceived risk. Agency theory indicates that strong ESG performance often reflects more effective internal governance, strengthening trust among key stakeholders, including investors, customers, and employees.\u201d<\/p>\n \u201cInvestors care not only about the quantity of information, but also its quality,\u201d adds Jun Xie<\/a>, Assistant Professor at Kyushu University\u2019s Urban Institute<\/a> and a co-author of the study. \u201cThis highlights the need for companies to communicate their substantive progress honestly, rather than relying on promotional, greenwash-like messaging.\u201d<\/p>\n Beyond increasing intrinsic value, higher ESG practices also bring a firm\u2019s market price closer to its intrinsic value, correcting both overvaluation bubbles and undervaluation. By addressing information gaps that may mislead investors, ESG efforts enable stock prices to reflect firms\u2019 fundamental values more promptly and accurately, thereby enhancing capital market efficiency.<\/p>\n At a global level, however, ESG\u2019s impact is uneven. The effects are more pronounced in advanced economies, while remaining limited in developing ones.<\/p>\n With the upcoming adoption of the International Financial Reporting Standards (IFRS) sustainability disclosure system, publicly listed companies will be required to report ESG information under a unified framework. The researchers hope that broader implementation of standardized rules will expand the dataset to support more thorough cross-firm comparisons going forward.<\/p>\n \u201cWhile creating economic, social, and environmental value, companies are also major consumers of resources and emitters of pollutants. Thus, ensuring a sustainable future requires shifting corporate actions toward sustainable practices,\u201d says Professor Hidemichi Fujii from Kyushu University\u2019s Faculty of Economics, Wang\u2019s academic supervisor. \u201cOur goal is to provide scientific evidence by objectively clarifying the impact of ESG factors. We aim to contribute to policies that transform corporate practices based on these findings..\u201d<\/p>\n Wang extends this perspective to the broader financial system, where ideally, information in capital markets should flow without distortion. \u201cResearch is only a vehicle,\u201d she reflects. \u201cWhat I look forward to is a more efficient and sustainable world. A better understanding of ESG can help guide both markets and society toward that direction.\u201d<\/p>\n Hidemichi Fujii, Professor<\/a>
\nFaculty of Economics<\/span><\/strong><\/p>\nResearch-related inquiries<\/h4>\n
\nFaculty of Economics<\/a>
\nContact information can also be found in the full release<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Based on a global study of 2,636 firms across 31 countries, researchers from Kyushu University provide scientific evidence of the economic benefits of environmental, social, and governance (ESG) practices. Professor Hidemichi Fujii Faculty of Economics Fukuoka, Japan\u2014This year marks the 20th anniversary of the Principles for Responsible Investment (PRI), launched with United Nations backing in […]","protected":false},"author":7,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[28,32,33,37],"tags":[43],"acf":[],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/sdgs.kyushu-u.ac.jp\/en\/wp-json\/wp\/v2\/posts\/29573"}],"collection":[{"href":"https:\/\/sdgs.kyushu-u.ac.jp\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sdgs.kyushu-u.ac.jp\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sdgs.kyushu-u.ac.jp\/en\/wp-json\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"https:\/\/sdgs.kyushu-u.ac.jp\/en\/wp-json\/wp\/v2\/comments?post=29573"}],"version-history":[{"count":4,"href":"https:\/\/sdgs.kyushu-u.ac.jp\/en\/wp-json\/wp\/v2\/posts\/29573\/revisions"}],"predecessor-version":[{"id":29786,"href":"https:\/\/sdgs.kyushu-u.ac.jp\/en\/wp-json\/wp\/v2\/posts\/29573\/revisions\/29786"}],"wp:attachment":[{"href":"https:\/\/sdgs.kyushu-u.ac.jp\/en\/wp-json\/wp\/v2\/media?parent=29573"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sdgs.kyushu-u.ac.jp\/en\/wp-json\/wp\/v2\/categories?post=29573"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sdgs.kyushu-u.ac.jp\/en\/wp-json\/wp\/v2\/tags?post=29573"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}