Odkrywanie zagadki ESG - analiza sektorowa cech ESG i ich moc predykcyjna (*)
[Uncovering the ESG puzzle – Sectorial analysis of ESG features and their predictive power]

Florentina Paraschiv 
(Chair of Finance, Zeppelin Universität, Friedrichshafen, GER)


The increasingly prominent role of Environmental, Social, and Governance (ESG) considerations 
in corporate strategy and investment decisions has increased the demand for reliable and 
comparable ESG metrics. However, a fundamental challenge persists: even similar companies 
within the same sector of activity show very different ESG scores, given the heterogeneity of 
ESG reporting. Regulators acknowledge this challenge, thereby the European Parliament's 
initiative to introduce sector specific European Sustainability Reporting Standards is 
delayed until 2026. 

In this study, we employ feature selection techniques to identify the sector-specific optimal 
sets of features to be reported for improved ESG performance. Our dataset comprises ESG data 
from Refinitiv for 10,935 public and private companies from three geographic regions, Asia, 
Europe, and the United States. Contrary to prior research, instead of simple filtering, we 
employ multiple feature selection methods within a nested cross-validation framework. Results 
show that certain ESG features are consistently important across sectors, such as features 
related to the sustainability of the supply chain and Corporate Social Responsibility (CSR) 
reporting. However, sector-specific patterns emerge in alignment with regulatory priorities. 
Biodiversity Impact Reduction emerges as particularly significant in the Energy sector, while 
Clean Technology shows high relevance in the Financial sector. Furthermore, we examine the 
degree of heterogeneity of ESG reporting within and across sectors and identify 
sector-specific ESG reporting hurdles facing regulatory reporting pressure. Stability 
measures conclude a high convergence of optimal sets of features across methods. All in all, 
we conclude that emissions reduction and CSR regulations drive the content on which companies 
report. 


(*) Joint work with Doga Alkan