Evolution of Brazilian Companies ESG Score


I am working on a research project that aims to understand the antecedents and consequences of Corporate ESG.

Eventually, I came up with the graph below.

This graph did not make much sense to me since ESG is a hot topic and, I believe, no one would expect that Brazilian firms decreased ESG practices over the last decade. “Something is wrong”, I thought!

Then, I realized that the sample of firms is different each year because some firms started to disclose ESG practices during the last decade. Basically, the number of firms disclosing in 2019 was 84, while in 2010 was 51.

I’d expect that a firm that recently started to disclose would get a lower score than a firm that has been implementing ESG practices for a while. Thus, the yearly average of all firms' ESG may be decreasing over time.

Then, I came up with the graph below. It only contains firms that disclose ESG practices since 2010.

In this graph, I have the same sample of firms in all years. The sample is smaller, but it is much more informative if I want to understand the evolution of corporate ESG during this period.

See the difference?

I hope you like it!

Henrique Castro Martins
Henrique Castro Martins
Assistant Professor of Finance