Does ESG Matter for Unlisted Companies in the Agri‐Food Industry? Evidence From Japan's Unlisted Agri‐Food Companies

ABSTRACT While ESG (environmental, social, and governance) is emphasized among listed companies for their stakeholders and ESG disclosures, ESG engagement among unlisted companies has been rarely examined due to data limitations. This is particularly problematic for the agri‐food industry that has significant impacts on the environment and consists mostly of unlisted companies. Thus, by constructing a unique data set of 514 unlisted agri‐food companies in Japan from 2018 to 2024, we investigate the patterns of ESG engagement and its association with economic performance across food supply‐chain sectors and companies' ownership types in the agri‐food industry. We find that ESG practices are more prevalent in the agricultural, food manufacturing, and wholesale sectors than in the retail sector, particularly among independent companies. However, these ESG practices have no influence on total sales in all cases and are negatively associated with net profits in the wholesale sector and among independent companies. These results suggest that ESG implementation may impose economic burdens on unlisted companies, underscoring the need for more effective public support and cross‐sector collaboration.