ItemArticle

ESG Narrative Quality in Green Bond Disclosures: Implications for Risk Perception, Transparency, and Market Trust

Title
ESG Narrative Quality in Green Bond Disclosures: Implications for Risk Perception, Transparency, and Market Trust
Creator
Gaur, Parul; Irfan, Mohammad; Ramasamy, R Kanesaraj; Mohammad Mir, Shakeeb; Subramanian, Parameswaran
Description
This research evaluates the extent to which firms green bond disclosures create and convey a meaningful representation of their Environmental, Social, and Governance (ESG) commitments. Additionally, this research explores how investors distinguish between disclosures that represent genuine commitment to sustainability and those that may be indicative of greenwashing, and how such distinctions impact their assessment of an issuers credibility as well as the issuers performance subsequent to the issuance of a green bond. The methodology employed in this research employs a convergent mixed-methods approach that combines quantitative methods (Natural Language Processing (NLP), financial modeling, etc.) with qualitative methodologies (case studies, interviews). The NLP methodology employed in this research includes sentiment analysis, topic modeling, and ambiguity measurement in order to determine the tone, thematic content, and linguistic clarity of the disclosure texts. Subsequently, the results of the NLP methodologies are correlated with firm level outcomes using cross validated partial least squares regression (PLS-R), event study methodologies, and one way ANOVA to test for temporal and industrial variability. Finally, the results of the computational and financial methodologies are supplemented by qualitative case studies and interviews to provide context for the patterns identified in the computational and financial methodologies. In summary, the results of this research demonstrate that firms that communicate in a clear, balanced, and verifiable manner experience better market reaction and more favorable accounting results subsequent to the issuance of a green bond than do firms whose communications are vague, overly optimistic, or lacking in consistency. Conversely, the findings suggest that investors have become increasingly sensitive to potential greenwashing and therefore are less likely to respond favorably to communications characterized by the aforementioned characteristics. 2025 by the authors.
Source
Risks;Volume;14;Issue;1;Article No.;1;
Date
01-01-2026
Publisher
Multidisciplinary Digital Publishing Institute (MDPI)
Subject
ESG disclosures; financial performance; green bond; natural language processing (NLP); sustainability communication
Coverage
Gaur P., Department of Management, Rajiv Academic for Technology and Management, Mathura, 281001, India; Irfan M., School of Business and Management, Chandigarh University, Unnao, 209859, India; Ramasamy R.K., Faculty of Computing Informatics, Multimedia University, Cyberjaya, 63100, Malaysia; Mohammad Mir S., School of Business and Management, Christ University, Bengaluru, 560029, India; Subramanian P., School of Business and Management, Christ University, Bengaluru, 560029, India
Rights
All Open Access; Gold Open Access; Green Open Access
Relation
ISSN: 22279091;
Format
online
Language
English
Type
Article

Citation

Gaur, Parul; Irfan, Mohammad; Ramasamy, R Kanesaraj; Mohammad Mir, Shakeeb; Subramanian, Parameswaran, “ESG Narrative Quality in Green Bond Disclosures: Implications for Risk Perception, Transparency, and Market Trust,” CHRIST (Deemed To Be University) Institutional Repository, accessed June 18, 2026, https://archives.christuniversity.in/items/show/23542.

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