In wonderful news for both planet and profit, a major new study confirms what optimists have long hoped: companies that prioritize environmental and social responsibility are genuinely thriving in today's markets.

As we celebrate the 20th anniversary of the United Nations-backed Principles for Responsible Investment, researchers at Kyushu University have delivered compelling evidence that environmental, social, and governance (ESG) practices create real, measurable value. Their findings, published in Business Strategy and the Environment, analyzed 2,636 companies across 31 countries and six continents, revealing an encouraging truth about the future of business.

The research shows that companies with strong ESG disclosure and performance enjoy higher intrinsic value—a measure that captures long-term potential beyond quarterly profits. Even better, these responsible practices help stock prices reflect companies' true worth more accurately, creating healthier, more efficient markets for everyone.

"We focus on firms' intrinsic value, as it goes beyond short-term metrics to include future opportunities," explains Xinyu Wang, the study's lead author and Ph.D. student at Kyushu University. "This offers a more stable measure of long-term value, which aligns with ESG's vision of sustainable value creation and a resilient global financial system."

The research team discovered something particularly heartening: ESG performance matters even more than disclosure alone. When companies genuinely improve their environmental footprint, strengthen workforce diversity, and enhance governance, they build deeper trust with investors, customers, and employees alike. This trust translates directly into enhanced company value.

Assistant Professor Jun Xie, a co-author of the study, emphasizes the importance of authenticity. "Investors care not only about the quantity of information, but also its quality," he notes. "This highlights the need for companies to communicate their substantive progress honestly." The message is clear: genuine commitment beats superficial messaging every time.

The positive impacts extend beyond individual companies. By correcting information gaps that can mislead investors, strong ESG practices help entire markets function more smoothly. Stock prices align more accurately with fundamental values, preventing both overvaluation bubbles and undervaluation—creating stability that benefits the entire economy.

While the effects are currently more pronounced in advanced economies, the global adoption of standardized ESG reporting through the International Financial Reporting Standards promises to expand these benefits worldwide. This harmonization will enable better comparisons and encourage more companies to embrace responsible practices.

Professor Hidemichi Fujii, Wang's academic supervisor, captures the broader vision beautifully: "While creating economic, social, and environmental value, companies are also major consumers of resources and emitters of pollutants. Thus, ensuring a sustainable future requires shifting corporate actions toward sustainable practices."

This research arrives at a perfect moment, offering scientific validation for the business case behind corporate responsibility. It demonstrates that the path to a sustainable future doesn't require sacrifice—instead, environmental and social responsibility creates a win-win scenario where companies thrive while contributing to a better world.

As more organizations embrace these practices and standardized reporting becomes universal, we can look forward to markets that reward genuine sustainability, creating prosperity that benefits businesses, investors, communities, and the planet alike.