The Impact of Sustainability Disclosure on Access to Capital: the Risk–Return Perspective

ABSTRACT This paper aims to analyze how companies that provide sustainability disclosure are considered regarding their risks by reducing informative asymmetries and analyzing the perspective of lenders and investors. After a literature review that showed not unanimous results, we developed an empirical analysis with a quantitative method on a sample of the Italian stock exchange's securities. The findings revealed how companies that carry out sustainability disclosure have better access to equity and a similar cost of credit than other companies. This difference also focuses on the average market cost of equity and credit. Additionally, filling a literature gap contributes to the body of knowledge about (i) the impact of sustainability disclosure on the cost of capital and risks and (ii) the relevance of increasing disclosure for the company. Practical implications are the following: (i) Companies are strongly encouraged to be socially and environmentally responsible; (ii) there is need to consider this factor in a company valuation.