This research examines how ESG disclosure influences market uncertainty through carbon disclosure. It uses a 10-year dataset from 2012 to 2021 of non-financial U.K. companies in the FTSE All-Share index. This study employs four regression methods to scrutinize the interplay between ESG disclosure, carbon disclosure, and market uncertainty. The research findings uncover a notable reduction in market uncertainty associated with ESG disclosure, aligning with the Information Asymmetry Theory. Interestingly, this study also uncovers that carbon disclosure amplifies this negative relationship, a finding that resonates with the Signaling Theory. These results hold true across various measures of ESG and market uncertainty. This study enriches the sustainability reporting literature with implications for theory and practice. It extends Information Asymmetry and Signaling Theories to U.K. non-financial firms, emphasizing the need for more research on sustainability disclosure. It underscores the role of ESG and carbon disclosure in reducing cost of capital, enhancing firm value, and boosting investor confidence. It calls for transparent ESG reporting by managers, regulatory promotion of such disclosures, and stakeholder utilization of these to evaluate a firm’s impact and contribution to the SDGs, fostering collaboration on sustainability. This study offers key insights for stakeholders such as managers, investors, regulators, researchers, policy makers, and educators in the realm of sustainability reporting and market dynamics.

This research examines the effect of ESG disclosure on the cost of capital for non-financial firms in the UK, indexed by the FTSE All-Share Index, during the period from 2014 to 2018. Using multivariate analysis with ordinary least squares (OLS), fixed effects, robust regression, and Tobit models, this research assesses the effect of ESG reporting, governance, and the cost of capital, including robustness checks using an alternative ESG indicator, the environmental pillar score. Contrary to expectations, ESG reporting is positively associated with the cost of capital. However, corporate governance moderates this relationship, weakening the positive correlation and reversing it to a negative association for firms with strong governance practices, consistent with the hypotheses. This research also finds that firm size, liquidity, profitability, and leverage, positively affect the cost of capital, while board size, independent board composition, audit committee independence, and auditor type do not significantly influence it. Notably, non-executive directors on the audit committee have a significant negative effect on the cost of capital. These findings are valuable for investors, companies, regulators, auditors, policymakers, and the academic and research community. Specifically, for investors, this study provides insights into how ESG disclosures can influence investment risks and returns, highlighting the importance of robust corporate governance. Companies can leverage these insights to enhance their governance practices and optimize their capital costs. Regulators and policymakers can use the findings to develop guidelines that encourage transparent ESG reporting and strong governance frameworks, thereby improving market stability and investor confidence. Auditors can utilize the results to better understand the effect of non-financial reporting on financial metrics, helping to provide more accurate audits and assessments. These findings inform investors, companies, regulators, auditors, and academia, in fostering a more sustainable and transparent financial environment.

This study examines how capital expenditure (capex) affects Environmental, Social, and Governance (ESG) reporting and how corporate governance moderates this effect. We use data from non-financial firms in the FTSE All Share index from 2012 to 2021 and measure ESG disclosure with the Bloomberg ESG Disclosure Score, capex with logarithm of the ratio of capital expenditure to total assets, and corporate governance with a composite index based on Board Size, Independent Board, Board Diversity, and Audit Committee Non-Executives. We also examine the non-linear and threshold effects of capex on ESG disclosure with spline regression models. We find that capex is positively linked to ESG disclosure and that this association is robust for firms with better corporate governance. Our findings imply that capex improves ESG performance and impact and that corporate governance enables ESG communication to stakeholders. Our research advances the existing literature by revealing the link between capex, governance, and ESG reporting in a dynamic and uncertain environment. Our study holds practical significance for companies, investors, and regulators who want to incorporate ESG factors into capex decisions and reporting.

In this research endeavor, we investigate the potential influence exerted by ESG performance on the market capitalization of non-financial corporations included within the UK FTSE All-Share Index during the eleven-year period spanning 2010 to 2021. Integrating insights from Resource-Based View and Stakeholder Theory, this research extends the literature by considering the moderating effect of governance on the ESG–market capitalization association. This study analyzes a comprehensive dataset of UK firms, employing robust econometric techniques to substantiate its conclusions. The results demonstrate a robust positive association between the overall ESG pillars and market capitalization. Environmental, social, and governance performances independently contribute to an increased market value. The analysis reveals that firms with superior internal governance structures, characterized by the presence of independent board members, board size, an independent audit committee, and the implementation of a split CEO–chair structure, experience a magnified positive impact from ESG disclosures on market capitalization. Effective governance mechanisms enhance the credibility and effectiveness of ESG initiatives, aligning them with stakeholder expectations and regulatory standards. This alignment fosters trust and cooperation, driving better financial performance and increasing market value. This research adds its voice to the increasingly compelling body of evidence that underscores the financial advantages associated with ESG integration and highlights the critical role of internal governance in amplifying these benefits. The findings have significant implications for policymakers, investors, and corporate managers. They advocate for the strategic incorporation of ESG criteria into corporate governance frameworks to achieve sustainable financial success.

This paper provides a unique COVID-19 disclosure measurement and investigates the association between the level of COVID-19 disclosure and uncertainty within annual reports for UK FTSE-All share non-financial firms. We used automated textual analysis to score the sampled annual reports. The results show that the level of COVID-19 disclosure varies from industry to industry. Furthermore, there is a positive relationship between COVID-19 disclosure and uncertainty in annual reports. Firms with larger boards exhibit more significant uncertainty in annual reports with COVID-19 disclosure. However, the significance of uncertainty in annual reports with COVID-19 disclosure remains at the same level with different board independence percentages. The unique findings of this paper are extremely relevant to governments, shareholders, policymakers, suppliers, and creditors.