Mandatory CSR and sustainability reporting: economic analysis and literature review

Abstract

This study collates potential economic effects of mandated disclosure and reporting standards for corporate social responsibility (CSR) and sustainability topics. We first outline key features of CSR reporting. Next, we draw on relevant academic literatures in accounting, finance, economics, and management to discuss and evaluate the potential economic consequences of a requirement for CSR and sustainability reporting for U.S. firms, including effects in capital markets, on stakeholders other than investors, and on firm behavior. We also discuss issues related to the implementation and enforcement of CSR and sustainability reporting standards as well as two approaches to sustainability reporting that differ in their overarching goals and materiality standards. Our analysis yields a number of insights that are relevant for the current debate on mandatory CSR and sustainability reporting. It also points scholars to avenues for future research.

New insights into corporate sustainability, environmental management and corporate financial performance in European Union: an application of VAR and Granger causality approach

“…The lack of standardization on ESG reporting, despite the common efforts of international standard-setters in the area of ESG practice, may affect the measures of ESG scoring. Therefore, aiming for standardization in disseminating ESG information is a first step to obtain a clearer image of the link between the constructs explored in this paper, as underlined by Christensen et al ( 2021 ). Otherwise, corporate sustainability reports will become highly complex, addressing numerous subjects in a general rather than a relevant and clear manner (Székely and Vom Brocke 2017 ), leading to higher cost for preparation, higher risk of litigation costs, or just negative reactions on the markets because of insufficient information disclosed on essential topics.…”

“…Managers must also have enough experience and expertise to cope with industry-specific challenges (Zaiane and Ellouze 2022 ) or county regulatory framework and enforcement mechanisms (Christensen et al 2021 ), especially in the case of mandatory adoption, to avoid the deterioration of CSR’s positive long-term moderating effect on corporate financial performance. Industries such as the energy or manufacturing sector are more sensitive to environmental concerns, so managers should integrate economic and environmental dimensions into the day-to-day decision-making process.…”

Product Market Competition and Voluntary Corporate Social Responsibility Disclosures†

“…Cao et al (2018) argue that firms can incur significant proprietary costs as a result of their competitors taking action in response to their disclosure 3 . Christensen et al (2021) suggest that proprietary cost is a key concern of mandatory CSR reporting requirements. To the extent that stand‐alone CSR reports are likely to contain sensitive information about firms' core operations ( provides examples of such CSR disclosure), this study examines whether and how firms' stand‐alone CSR reports are affected by the intensity of product market competition (PMC).…”

“…Cao et al (2018) argue that firms can incur significant proprietary costs as a result of their competitors taking action in response to their disclosure. 3 Christensen et al (2021) suggest that 1.…”

An Empirical Study on the Corporate Social Responsibility Regime in India: Pre-COVID and COVID Times

“…Thus, no country in the world has a legislation that makes CSR expenditure compulsory (Kakade, 2019). Even countries such as China, France, South Africa and others only require companies to disclose their CSR expenditure mandatorily instead of mandating a compulsory contribution towards CSR (Christensen et al, 2021).…”