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Environmental and Social Disclosures and Firm Risk


We examine the link between a firm’s environmental (E) and social (S) disclosures and measures of its risk including total, systematic, and idiosyncratic risk. While we do not find any link between a firm’s E and S disclosures and its systematic risk, we find a negative and significant association between these disclosures and a firm’s total and idiosyncratic risk. These are novel findings and are consistent with the predictions of the stakeholder theory and the resource-based view of the firm suggesting that firms which make extensive and objective E and S disclosures promote corporate transparency that can help them build a positive reputation and trust with their stakeholders. This in turn can help mitigate the firms' idiosyncratic/operational risk. These findings are important for all corporate stakeholders including managers, employees, and suppliers who have a significant economic interest in the survival and success of the firm.

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  1. While we do not have a specific hypothesis for the link between E and S disclosures and total risk of the firm as measured by stock volatility, for comparability of results with prior relevant studies (e.g. Jo and Na 2012), we also test this link.

  2. For sake of brevity, the results discussed in this paragraph are not reported in the text, but are available upon request.



Capital asset pricing model


Corporate financial performance


Corporate social disclosure


Corporate social performance


Corporate social responsibility




Financial Times Stock Exchange Group


Green house gas


Global reporting initiative


International Organization for Standardization


Market to book ratio


Resource-based view (of the firm)


Return on assets




Standard industrial classification


United Kingdom


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Correspondence to Amama Shaukat.


Appendix 1

See Table 5.

Table 5 Variables, definitions and data sources

Appendix 2

See Table 6.

Table 6 E and S indicators with Bloomberg fields

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Benlemlih, M., Shaukat, A., Qiu, Y. et al. Environmental and Social Disclosures and Firm Risk. J Bus Ethics 152, 613–626 (2018).

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  • Environmental and social disclosures
  • Firm risk
  • Voluntary disclosure
  • Corporate social responsibility
  • Stakeholder theory
  • Resource-based view
  • Risk management