Sustainability Pays? Southeast Asian Firms With Stronger SDG Disclosure Show Higher Market Value

Corporate sustainability reporting is now becoming part of how investors read corporate strategy, risk and long-term value. A new study of 660 publicly listed companies in Indonesia, Malaysia, Singapore and Thailand finds that firms disclosing more information linked to the Sustainable Development Goals (SDGS) tend to have higher market valuation.

The study, titled "Sustainable Development Goal (SDG) Disclosure and Firm Value: Empirical Evidence from Southeast Asia," was authored by Arie Pratama, Nanny Dewi Tanzil, Poppy Sofia Koeswayo, Kamaruzzaman Muhammad and Lokita Rizky Megawati. Published in the Journal of Risk and Financial Management, the research examines whether corporate disclosure around the 17 SDGs is associated with firm value, measured through price-to-book value.

The findings suggest that companies that report more visibly on SDG-related activities are valued more favourably. However, the study walso warns that disclosure is uneven, selective and not the same as performance. Many companies disclose goals closely tied to business operations, such as decent work, climate action and responsible production, while giving far less attention to hunger, oceans and other development priorities.

Investors are reading sustainability signals

The rise of SDG disclosure reflects a wider shift in global business. Investors, regulators and consumers are increasingly asking firms to explain how their operations align with sustainable development. For companies, the SDGs offer a recognised language for linking business activity with global priorities such as climate action, decent work, gender equality, clean energy and responsible consumption.

The study argues that SDG disclosure can serve several functions. It can reduce information gaps between managers and investors, strengthen legitimacy with stakeholders and signal that a company understands long-term environmental, social and governance risks. In emerging markets, where reporting standards and investor expectations are still evolving, such disclosure may carry particular importance.

Southeast Asia is a valuable testing ground for this question. The region combines fast-growing capital markets, rising ESG interest, different regulatory systems and high exposure to climate, social and governance risks. Yet corporate sustainability reporting across the region remains uneven. Some firms integrate the SDGs into detailed sustainability strategies; others mention them only briefly.

What the researchers studied

The research covers 660 listed companies across four countries: 77 firms in Indonesia, 333 in Malaysia, 76 in Singapore and 170 in Thailand. The study period covers fiscal years 2022 and 2023, chosen to capture post-pandemic reporting and valuation patterns.

The authors used Refinitiv Eikon data to measure whether companies disclosed information linked to each of the 17 SDGs. Each goal received a binary score: one if disclosed, zero if not. The total score was then divided by 17, producing a disclosure breadth measure between zero and one.

The study measures whether firms disclose SDG-related information, not whether the disclosure is deep, credible, assured or linked to real outcomes. A company that briefly mentions an SDG and a company that reports detailed targets and progress can both be counted as disclosing that goal. The authors are clear that the score captures breadth, not quality.

Firm value was measured using price-to-book value, a market-based indicator that compares a firm's market price with its book value. The researchers used descriptive statistics, ANOVA and multiple regression analysis with robust standard errors. They also ran several robustness checks, including winsorised regression, year-by-year regressions, country and industry controls, and a two-stage least squares test to address possible endogeneity.

The market reward: SDG disclosure and firm value

The primary outcome is that SDG disclosure is positively and significantly associated with firm value. In the baseline regression, companies with broader SDG disclosure had higher price-to-book value, even after controlling for firm size, profitability and leverage.

The result remained broadly stable across robustness tests. The positive association continued after limiting the effect of outliers, examining 2022 and 2023 separately, adding country and industry controls, and applying an endogeneity check. The strength of the result varied across models, but the direction stayed positive.

The finding supports the view that investors may treat SDG disclosure as a useful signal. A firm that reports more extensively on sustainability may be seen as more transparent, better prepared for regulatory pressure and more aware of long-term risks.

The authors do not claim that disclosure causes higher firm value. The relationship may run in both directions. Firms with higher valuation may have more resources, stronger reporting teams and greater investor visibility, allowing them to disclose more. The study, thus, interprets the result as an association, not proof of causation.

The disclosure gap: Some SDGs get attention, others are left behind

The study finds that the average SDG disclosure score across firms is 0.48. Companies disclosed information on roughly 48 percent of the 17 goals on average. But the range is wide, from firms with no SDG disclosure to firms reporting across all goals.

The most frequently disclosed goal was SDG 8, decent work and economic growth, with an overall disclosure rate of 73.79 percent. That is unsurprising. Employment, productivity, labour practices and economic contribution are closely tied to core business activity and often already appear in corporate reports.

SDG 13, climate action, was also highly disclosed, at 67.88 percent. SDG 12, responsible consumption and production, followed at 66.67 percent. These areas are increasingly material to investors because they connect directly with climate risk, resource use, supply chains and regulatory scrutiny.

The least disclosed goals reveal the limits of current corporate reporting. SDG 14, life below water, was disclosed by only 22.12 percent of firms. SDG 2, zero hunger, stood at 21.52 percent. These goals may appear less directly connected to many firms' operations, especially outside agriculture, food, fisheries, maritime industries and coastal infrastructure. The low disclosure also raises a deeper concern: companies may be focusing on goals that are easier to communicate or more attractive to investors, rather than engaging with the full development agenda.

Country and sector divides shape reporting

The study finds statistically significant differences in SDG disclosure across countries. Indonesia and Thailand showed higher average disclosure scores than Malaysia and Singapore in the sample. The authors suggest that these differences may reflect variations in regulatory pressure, public expectations, sustainability reporting maturity or sector composition.

Industry differences were also significant. Utilities had the highest average SDG disclosure score, followed by energy and healthcare. These sectors face strong environmental and social scrutiny, making sustainability disclosure more visible and often more expected.

Information technology had the lowest average disclosure score, followed by industrials and consumer discretionary firms. This does not necessarily mean these sectors have no sustainability impact. Instead, it may suggest weaker reporting habits, less direct regulatory pressure or difficulty mapping digital and consumer-facing business models to the SDG framework.

For regulators, these country and sector gaps matter. They show that sustainability disclosure cannot improve through broad encouragement alone. Different sectors need clearer guidance on what meaningful SDG reporting looks like in their business context.

Why the findings matter for Southeast Asia

Southeast Asia is becoming a major arena for sustainable finance. Governments are promoting green growth, stock exchanges are strengthening ESG guidance and investors are paying closer attention to climate, labour and governance risks. Yet the quality and consistency of corporate sustainability information remain uneven.

If SDG disclosure is linked to market valuation, then better reporting can help firms attract capital and improve investor confidence. However, there is also a risk: if markets reward disclosure breadth without assessing quality, companies may have incentives to expand sustainability language without changing business practice.

The risk is often described as SDG-washing. It occurs when firms use the language of global goals to project responsibility without providing measurable evidence of impact. The study's binary disclosure measure cannot detect this problem directly, but its limitations make the policy issue clear. Future reporting frameworks must move beyond whether a goal is mentioned and ask how a company contributes, what targets it sets and whether progress is verified.

Policy lessons for regulators, companies and investors

Regulators have an opportunity to turn SDG reporting from a visibility exercise into a credibility test. Clearer mapping rules, stronger links with national development plans and greater attention to reporting quality would help investors separate serious sustainability strategies from broad claims

Stock exchanges and securities regulators can ask firms to connect SDG claims with measurable indicators, timelines and governance responsibilities. Reporting should not only list relevant goals, but explain strategy, risks, actions and outcomes.

Companies should treat SDG disclosure as a strategic communication tool, not a compliance decoration. Firms can strengthen credibility by linking SDG reporting to business models, investment decisions, supply chains, workforce policies and risk management.

For investors, SDG disclosure may be useful, but it should not be read in isolation. Investors need to assess whether disclosures are specific, comparable, supported by data and subject to assurance. A wider disclosure score may signal transparency, but it does not automatically prove sustainability performance.

For development agencies and international organisations, the findings point to capacity-building needs. Smaller and less mature firms may need support to improve sustainability data systems, disclosure practices and assurance mechanisms.

What remains unanswered

The study provides useful evidence that SDG disclosure has become relevant to market valuation in Southeast Asia. But the limitations can't be ignored. The study covers only two years, which limits long-term analysis. The sample is uneven, with Malaysia contributing the largest number of observations. The disclosure measure captures breadth rather than quality. The study also cannot fully rule out reverse causality, even though it includes endogeneity checks.

Future research should examine whether detailed, credible and assured SDG reporting produces stronger valuation effects than simple disclosure breadth. Longer time periods would help determine whether sustainability disclosure predicts future firm performance. Researchers should also study the role of ownership structure, board quality, institutional investors, analyst coverage and assurance practices.

The bigger story

In Southeast Asia, the market appears to value firms that communicate their SDG engagement more visibly. The finding gives companies a financial reason to improve transparency and gives regulators a policy reason to strengthen reporting standards.

The SDGs were designed as a global agenda for governments, businesses and society. If corporate reporting can help direct capital toward firms that manage social and environmental risks responsibly, it can support more sustainable growth. However, if disclosure remains selective and shallow, it may reward communication rather than impact.

In short, SDG disclosure may help build investor confidence, but only if markets, regulators and stakeholders demand evidence behind the words. For Southeast Asia, the next challenge is not simply more sustainability reporting. It is better sustainability reporting, with clearer metrics, stronger assurance and closer links between corporate value and real development outcomes.