Machine Learning Based ESG Disclosure Sentiment and Financial Performance: Corporate Sustainability and Behavioural Finance Implications from Nifty 50 Firms (International Journal For Multidisciplinary Research)

Summary

• Most ESG disclosures from fifteen Nifty 50 firms have a negative tone (56.3%), indicating a culture of risk disclosure.p.1
• Negative sentiment is highest in social disclosures (61.1%), followed by governance (57.8%) and environmental (50.0%).p.1
• The study draws on 810 ESG statements from fifteen Nifty 50 firms for FY2023–FY2025, classified with machine learning models.p.3
• The support vector machine was the best classifier, with an accuracy of 70%.p.19
• ESG sentiment correlates positively with financial performance: r = 0.337 with ROA and r = 0.439 with ROE.p.21
• Sun Pharma records the most positive ESG sentiment, with 50.0% positive statements.p.12

Key insights

1. BRSR reporting became mandatory for the 1,000 largest companies by market cap from financial year 2022-23, including all Nifty 50 firms.p.2
2. Apollo and Wipro show the highest share of negative statements at 72.2%.p.12
3. NTPC and ONGC also show high negative sentiment at 68.5%.p.13
4. Sun Pharma has the lowest governance negative sentiment among the firms studied, at 16.7%.p.15
5. In the OLS model, ESG sentiment has a significant positive effect on ROA (β = 0.123) and ROE (β = 0.193).p.22
6. The explained variance is 33.1% for ROA and 20.5% for ROE in the overall ESG sentiment models.p.22
7. Sub-dimension coefficients are unstable because E, S and G scores are nearly perfectly multicollinear, so those hypotheses are inconclusive.p.25