Innovative sustainability: how artificial intelligence disclosure enhances the risk-reducing effect of ESG performance

Unofficial AI-generated summary based on the public title and abstract. Not an official translation.

🔬研究者:Provides empirical evidence on the interaction between AI disclosure and ESG performance in risk reduction, contributing to sustainability and digital governance literature.

🏢実務担当者:Corporate sustainability/disclosure teams can leverage AI disclosures in reports to enhance the risk-reducing credibility of ESG practices.

🏛政策担当者:Regulators may consider encouraging AI transparency as a complement to ESG disclosure mandates to improve market efficiency.

This study examines how ESG performance reduces firm risk and how AI disclosure strengthens this effect, using 2020–2024 panel data from 1,310 European firms. Results show that ESG lowers leverage-based risk, especially when firms disclose AI initiatives. The study analyzes panel data from 1,310 listed firms across 15 European countries over the period 2020–2024, yielding 6,550 firm-year observations. Firm risk is measured using financial leverage, ESG scores are obtained from Bloomberg and AI disclosure is measured through content analysis using both a binary disclosure indicator and an AI word-count measure. The analysis applies fixed effects regression as the baseline model, supported by generalized method of moments (GMM), random effects, Heckman two-step estimation and additional robustness checks. The results reveal a significant negative relationship between ESG performance and firm risk, supporting the risk-reducing potential of sustainability engagement. Moreover, AI disclosure strengthens this relationship, indicating that firms disclosing AI-related initiatives in their reports experience greater risk mitigation benefits from ESG practices. Robustness tests confirm the consistency of the findings across alternative specifications. This study contributes to the sustainability, risk management and digital governance literature by showing that AI disclosure acts as a complementary transparency mechanism that enhances the effectiveness of ESG performance in reducing firm risk. Rather than treating ESG and digital transformation as separate dimensions, the study highlights their interaction and provides evidence that AI-related disclosure can improve stakeholder confidence, reduce information asymmetry and support more effective risk management.

• semanticscholar https://doi.org/10.1108/ijppm-07-2025-0680first seen 2026-07-13 06:45:53