Signaling ESG Disclosure Readiness Before Listing: Text-Mining Evidence from Indian IPO Prospectuses (Frontiers in Sustainability)

Summary

• The study analyzes a sample of 310 non-financial operating-company initial public offering prospectuses in India issued from FY2021-22 to FY2025-26.p.1
• On average, ESG-related sentences represent 11.382% of total clean sentences across the analyzed prospectuses.p.1
• Governance disclosure is the most prevalent pillar, accounting for 8.605% of clean sentences and 75.5% of all ESG-classified content.p.1
• Social and environmental disclosures account for 1.462% and 1.314% of clean prospectus sentences, respectively.p.1
• An average prospectus in the sample contains around 6,365 clean sentences, including approximately 720 ESG-related sentences.p.9
• Utilities issuers recorded the highest average overall ESG disclosure intensity at 13.497%, whereas Telecommunications recorded the lowest average at 9.441%.p.11

Key insights

1. Governance topics account for 75.5% of all ESG sentences in Indian IPO prospectuses, demonstrating a heavily compliance-oriented signaling approach.p.9
2. Social and environmental disclosure topics compose only 12.8% and 11.7% of total ESG text, respectively.p.9
3. Average overall ESG disclosure intensity grew marginally over time, rising from 11.1% in FY2021-22 to 11.7% in FY2025-26.p.9
4. Utilities issuers achieved the highest sector average overall ESG disclosure score at 13.497%, supported by a leading environmental disclosure score of 4.56%.p.11
5. Telecommunications issuers exhibited the lowest sector average overall ESG disclosure score at 9.441%.p.11
6. Larger issuers by total assets disclose significantly less governance-related content in their prospectuses.p.20
7. Board size and board independence are jointly associated with variation in governance disclosure in IPO prospectuses.p.1