Empirically Testing the Relationship Between Natural Capital and Corporate Performance Using CDP Scores

Environmental disclosure and environmental, social, and governance assessments are gaining importance, using Corporate Disclosure Project (CDP) scores to evaluate corporate environmental disclosure. However, scarce evidence links CDP scores with performance and value among Japanese manufacturing firms. This study examines these associations using panel data from 2018 to 2023, combining financial data from Nikkei NEEDS Financial QUEST with CDP scores for climate change, water security, and forests. CDP ratings were converted into ordered numerical values, and regression models were estimated with firm-level controls, firm age, applicable fixed effects, and an annual macroeconomic control variable. Robustness checks included categorical score specifications, propensity score matching, and two-step system generalized method of moments estimation. The results indicate that the overall CDP score is positively associated with Tobin’s Q, whereas the evidence for return on assets and return on equity is weaker. Improvements in the overall score are also linked to increases in Tobin’s Q. By contrast, individual climate change, water security, and forest sub-scores show weak and inconsistent statistical significance. These findings should be interpreted as associations, not definitive causal effects. The study extends environmental accounting research beyond carbon-focused analyses, suggesting that aggregate CDP evaluations are more value-relevant than disaggregated sub-scores.