How do visual cues in ESG reports affect investors' decisions and company outcomes in terms of financial performance and ESG score?
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- This paper aims to show the impact of visual cues (images) in ESG reports on the behavior’s investors, the ESG score, and the company's performance. We manually counted the number of times that images (for aesthetics and not infographics) appeared in a large collection of 1,667 ESG reports between 2007 and 2020. Firstly, we find that the impact of the number of images in ESG reports on companies' ESG scores is not significant. However, the use of images seems to negatively influence the social pillar score. Secondly, we find that visual cues impact the investors’ decision-making in the long-term (60 days around the release of the ESG report) but not in the short-term (1-2 days around the release). Thirdly, we show that more evidence is needed to understand the specific influence of visual cues on financial performance. Overall, this paper contributes to prior literature by showing that there exists a link between the number of visual cues in ESG reports and investors' decision-making processes and offering practical implications for companies seeking to enhance their ESG performance and attract socially responsible investors. It also offers valuable insights for companies engaged in ESG reporting, an area where there is currently a lack of standardized regulations.