Using textual analysis of annual reports from US publicly traded firms, we examine whether ESG disclosure clarity is associated with managerial sentiment, firm fundamentals, systematic risk, and risk-adjusted performance. We conceptualize ESG disclosure clarity as an economically meaningful dimension of ESG disclosure quality that complements, rather than substitutes for, existing measures of readability, tone, and disclosure intensity. Our work contributes to the literature on narrative disclosure and ESG reporting by highlighting that the usefulness of ESG information depends not only on the amount of information disclosed, but also on the clarity with which firms communicate it.

JEL Classification: G14, M14, M41