You never know the value of water before the well runs dry - The impact of Sustainable Development Goals on firm value

The contribution to the 17 Sustainable Development Goals (SDGs) represents the next generation of measures for the sustainability of firms. We are the first to study the impact of a firm’s SDG performance on its value using unique data on SDG-aligned products and services from more than 5,800 global firms. Comparing firms that disclose their SDG performance to 25,800 non-disclosing firms reveals significant differences. We estimate an SDG disclosure-choice model and integrate the results into a firm-value model. Our results reveal the impact on firm value of specific SDGs; for example “combating hunger”, “attaining gender equality”, and “optimizing material use” have a significantly negative, whereas “ensuring health” and “mitigating climate change” have a significantly positive impact. The results remain robust after controlling for firms’ environmental, social und governance (ESG) scores and countries’ SDG performance. We recommend including a firm’s SDG performance to more precisely assess its value.