The Evolution of ESG Reports and the Role of Voluntary Standards

We examine the evolution of ESG reports of S&P 500 firms from 2010 to 2021. The percentage of firms releasing these voluntary disclosures increased from 35% to 86% during this period, although the length of these documents experienced more modest growth. Using a semisupervised machine-learning approach and guided by volun- tary standards that identified material ESG issues, we explore whether the content in these reports has become more relevant to investors. On average, firms devote most of their reports to topics that are material to their sector. The relative amount of material information increased by 11% after the release of voluntary standards. This increase was driven by firms that were not involved in the standard-setting process. Firms that helped develop the standards increased material disclosures at similar rates while the standards were being developed. These results provide new insights into how ESG reports evolved.