The financial impact of esg disclosure on saudi companies: A study of voluntary reporting under the tadawul initiative

This study investigates the interconnectedness between environmental, social, and governance (ESG) disclosure and firm performance among the listed companies on the Saudi exchange (Tadawul) from 2018, when the initiative started, till 2024. The study employed the Bloomberg database, and financial data for 384 companies was analyzed, revealing that only 52 companies had available ESG scores up to 2024. The research explores the effect of ESG reporting on financial sustainability, emphasizing the relationship between environmental stewardship, social responsibility, and corporate governance. The finding provides empirical evidence of a positive correlation between ESG disclosure score and key financial metrics, including profit margin, market capitalization, sustainable growth rates, and revenues. By analyzing the co-relation, the study aims to enhance understanding of how effective ESG practices can foster corporate market image and reputation, investor loyalty, and overall financial performance, particularly within the unique context of Saudi Arabia. This study contributes to filling the empirical gap in the literature related to the impact of ESG disclosure in the emerging market of Saudi Arabia.