The Value of the Company is Influenced by Its Environmental, Social, and Governance Performance, with an Appropriate Evaluation Acting as a Moderating Variable

Purpose: This study examines the relationship between environmental, social, and governance (ESG) performance and firm value among non-financial companies listed on the London Stock Exchange (FTSE 100). In particular, it investigates whether the COMPANIES HOUSE environmental evaluation moderates the relationship between ESG performance and firm value. Design/Methodology/Approach:The study uses panel data from 23 non-financial FTSE 100 companies over the 2021-2023 period, yielding 115 firm-year observations.Firm value is measured using Tobin's Q, while ESG performance is represented by the natural logarithm of a composite ESG score.COMPANIES HOUSE environmental evaluation is incorporated as a moderating variable.The analysis employs pooled ordinary least squares (Pooled OLS), fixed-effects, and random-effects specifications, with the Chow, Breusch-Pagan Lagrange Multiplier, and Hausman tests used to assess the appropriate panel-data specification.The regression models also control firm size, leverage, liquidity, and investment intensity.Findings: The results indicate that neither ESG performance nor COMPANIES HOUSE environmental evaluation has a statistically significant direct effect on firm value.However, the interaction between ESG performance and COMPANIES HOUSE evaluation is statistically significant and negative.The inclusion of the interaction term increases the explanatory power of the model, with R² rising from 0.281 to 0.313.The findings suggest that the valuation effects of ESG disclosure depend on the firm's independently verified environmental performance.In particular, once strong environmental performance has been externally established, additional ESG disclosure may provide diminishing marginal informational value to investors.Practical Implications: The findings suggest that investors should interpret ESG disclosures alongside independently verified environmental performance rather than considering ESG scores in isolation.For corporate managers, the results highlight the importance of substantive environmental performance and credible sustainability reporting over simply increasing the volume of ESG disclosure.Regulators may also benefit from maintaining reliable environmental assessment mechanisms that provide external benchmarks for evaluating corporate sustainability claims.Originality/Value: This study contributes to the ESG-firm value literature by examining the moderating role of externally evaluated environmental performance in a UK FTSE 100 setting.The negative interaction effect indicates that ESG disclosure and external