From <scp>ESG</scp> Disclosure to Financial Impact: Unpacking the Role of <scp>SDG</scp> Alignment and Lag Effect in <scp>ICT</scp> Firms

ABSTRACT This study develops an integrated framework explaining how ESG reporting, when aligned with the Sustainable Development Goals (SDGs), influences firm performance over time. Moving beyond static or symbolic interpretations, it conceptualizes ESG–SDG alignment as a strategic, institutional, and capability‐building process through which firms embed sustainability principles into strategy, governance, and operations. By combining BERTopic and long short‐term memory (LSTM) models, this analysis captures both the semantic content and temporal dynamics of ESG disclosures, addressing persistent limitations in traditional ESG ratings that neglect narrative quality and lagged financial effects. Empirical evidence from 205 publicly listed Taiwanese ICT firms shows that ESG topics aligned with SDG 6 (Clean Water and Sanitation), SDG 13 (Climate Action), and SDG 9 (Industry, Innovation, and Infrastructure), specifically water resource management, carbon emissions reduction, and digital transformation, exhibit significant positive associations with firm earnings. Firms that disclose deeper, sector‐relevant, and credible sustainability commitments demonstrate stronger and more consistent financial performance, underscoring that narrative depth and thematic relevance matter more than disclosure volume. Theoretically, the study unites stakeholder, institutional, sustainability accounting, impact measurement, and dynamic capabilities perspectives to explain how ESG reporting converts external legitimacy pressures into internal adaptive capacity and long‐term value creation. Practically, it highlights the importance of linking ESG disclosures to measurable SDG targets and using real‐time sustainability indicators to enhance transparency. Overall, the research advances a temporally sensitive and impact‐oriented understanding of ESG reporting as both a semantic construct and an adaptive process that builds trust, strengthens governance, and generates sustained financial and societal value.