It's only words? ESG disclosure and corporate sustainability in Brazil

We investigate the effects of ESG disclosure on the corporate sustainability performance of listed firms in Brazil. Building on the concept of extensive and intensive margins, we differentiate between voluntary and mandatory ESG disclosure. First, we find that smaller firms and those with initially low ESG scores benefit significantly from voluntary ESG disclosure (extensive margin). Second, firms with initially high ESG scores benefit significantly from greater scale and scope in mandatory ESG disclosures (intensive margin), particularly in the environmental domain. Our study provides novel and differentiated evidence on the effects of ESG disclosure and offers implications for managers, investors, and policymakers.