The impact of mandatory ESG Disclosure on stock performance: an analysis of European energy companies under CSRD

The paper aims to illustrate the effect on share prices of the Corporate Sustainability Reporting Directive issued by the European Union, subsequently ratified by only a few of its member States. The year 2025 represents the first year of mandatory reporting for large European listed companies with reference to the fiscal year 2024, and what distinguishes this directive is precisely its mandatory nature, the first of its kind in the world. The CSRD is a key tool for the European Union to reach the ambitious goal of achieving climate neutrality by 2050, objective of the Green Deal framework, launched in 2019. In particular, the study is based on an empirical analysis of 22 companies active in the energy sector, the sector that is reported to be the most polluting: these companies represent a significant sample of energy firms active in countries where the CSRD has been ratified, with empirical evidence showing that abnormal returns are positive after the legislation came into force. The empirical evidence shows that the market reassesses the expected returns and risk profile of European companies as a result of increased transparency of Environmental, Social and Governance information.