Sustainability reporting and ESGC integration in the automotive sector: Global trends and future perspectives

This study comprehensively examines the impact of ESGC (Environmental, Social, Governance Scores, and Controversy) performance on firms' financial outcomes in the context of continuity, discontinuity, or absence. To understand the strategic role of ESGC in financial sustainability, data from 117 firms across 26 countries over the 2002–2021 period was analyzed. The study highlights the effects of ESGC continuity on critical metrics such as innovation, profitability, governance standards, and social responsibility. Additionally, the Dynamic Time Warping (DTW) algorithm was used to analyze the relationship between ESGC and financial metrics over time and to perform clustering among countries and firms. The results show that firms with ESGC continuity exhibit stronger financial performance. Countries such as Germany, France, and South Korea lead in ESGC practices, while discontinuities in ESGC practices in countries like China and India have resulted in uncertainty and weaker financial performance. Simulation analyses reveal that increasing ESGC continuity could lead to significant improvements in net profit margin, operating profit margin, and asset turnover. The importance of ESGC lies in its role as a strategic tool for aligning with sustainable development goals and global standards. Integrating environmental responsibility, social benefits, and governance standards not only creates corporate value but also enhances investor confidence, ensuring long-term financial stability. In this context, promoting ESGC continuity is critical for building sustainable business models. This study underscores the strategic value of ESGC policies and serves as a guide for policymakers aiming to foster sustainable practices.