The integration of environmental, social and governmental (ESG) performance into corporate reporting is not only changing external reporting, but also the organization itself. As IR sheds light on the interdependencies of capitals creating value for organizations over time, it is expected that organizations engaging in Integrated Reporting (IR) will increase the value relevance of their ESG performance. To study the impact of IR, we rely on a sample of 1513 firm-year observations from 2004–2015. We conduct a regression-based comparison of organizations using IR to (1) themselves before the implementation of IR and to (2) competitors not using IR. The findings demonstrate that organizations increase the value relevance of their ESG performance by adopting IR. Nevertheless, IR should not be adopted with the objective of outperforming competitors, as we found no evidence that the value relevance of ESG performance is higher for organizations using IR than for non-IR users. Using most recent longitudinal data, we show the efficiency of IR, providing evidence that its implementation increases the value relevance of ESG performance and adding to the recent debate in the IR literature, e.g. Mervelskemper and Streit (2016).

Keywords: Integrated Reporting (IR), Environmental, Social and Governmental (ESG), Performance, sustainability, value relevance