From words to action? Linking ESG reports to environmental performance.

Companies increasingly use ESG reports to communicate their environmental priorities, yet it remains unclear whether the issues they emphasise correspond to measurable improvements in environmental performance. Using computational linguistics, we analyse the full texts of 1,477 ESG reports from companies listed in the STOXX Europe 600 index, identifying 34 main topics-six of which are related to environment. We describe how these topics evolve over time and differ across sectors, cluster companies based on their thematic focus, and test whether specific topics are associated with tangible low-carbon transition efforts. Our findings show that the alignment between environmental communication and environmental performance is topic-dependent. Topics such as sustainable value chains and renewable energy are associated with improvements in environmental KPIs, whereas others, including emissions or electric vehicles, show no significant association. Methodologically, our study advances prior work by combining structural topic modelling with firm-level KPI analysis to evaluate ESG disclosure at the level of specific environmental themes rather than aggregate reporting measures. Our study demonstrates how topic-specific reporting patterns relate to environmental outcomes and offers a more nuanced understanding of when ESG reporting reflects substantive environmental action.