Determinants of environmental, social, and governance disclosure: A systematic literature review

Abstract

The popularity of environmental, social, and governance (ESG) investing or socially responsible investing is pushing private sectors to improve their ESG performance. Stakeholders, namely, investors, are relying on firms' environmental, social, and governance disclosures (ESGD) to evaluate their ESG performance and strategize their investment decision‐making. Since firms have substantial discretionary power in deciding the quantity and quality of ESGD, understanding the drivers and motivations of ESGD is paramount. This study examines the literature on the determinants of ESGD, and 36 articles published in a period spanning from 2006 to 2022 were analyzed and synthesized via a systematic literature review approach. Ninety‐one researchers from 30 countries contributed to these studies. Of these studies, 28% perform cross‐country investigations. This study found that although there is no single underpinning theory for ESGD, ESGD determinant studies are well supported by multiple theoretical frameworks, such as stakeholder theory, legitimacy theory, and institutional theory. This study reveals many factors that have an impact on ESGD, such as natural disasters, political and legal systems, ownership structure, board characteristics, and the CEO's characteristics. This study contributed to the burgeon of literature on ESG by offering valuable insights into the antecedents to ESG performance and facilitating future enhancements of a better ESGD framework. Lastly, this study also reveals future research directions for scholars to enrich the burgeoning literature in ESG.

How can organizations measure the integration of environmental, social, and governance (ESG) criteria? Validation of an instrument using item response theory to capture workers' perception

“…Governance criteria evaluate factors such as board composition (Issa, 2023), executive compensation (Uyar et al, 2023a), risk management (Cagli et al, 2023), shareholder rights (Kapil & Rawal, 2023), and business ethics (Barko et al, 2022). Robust governance practices ensure accountability, integrity, and responsible decision-making within an organization (Seow, 2023). Assessing governance criteria enables investors to gauge the effectiveness of a company's management and its commitment to long-term value creation (Hieu & Hai, 2022).…”

Tax incentives, common institutional ownership, and corporate ESG performance

“…Corporate ESG reporting has transitioned from voluntary to mandatory disclosure. In contrast, in developing countries like China, the initiation of ESG development occurred later, and ESG-related disclosures are currently in the voluntary stage (Seow, 2023). Currently, international ESG rating agencies assign an average score of around 20 points (out of 100) to thousands of listed Chinese companies.…”

A Review of CSR and ESG Disclosures Determinant Studies: Comparability and Ambiguities

“…Additionally, there are several articles focusing on the determinants of CSRD and ESGD. These explore determinants of CSRD in both developed and developing countries (Ali et al, 2017), CEO characteristics as determinants of CSRD (Velte, 2020a), institutional ownership's impact on ESGD (Velte, 2020b), determinants of ESGD (Seow, 2023), and the in uence of corporate In contrast, ESG principles trace their origins back to responsible investment practices. The concept was initially introduced in the 2004 "Who Cares Wins" report by 18 global nancial institutions.…”