Non‐financial disclosure regulation and environmental, social, and governance (<scp>ESG</scp>) performance: The case of <scp>EU</scp> and <scp>US</scp> firms

Cicchiello, Antonella Francesca; Marrazza, Ferdinando; Perdichizzi, Salvatore

doi:10.1002/csr.2408

Cited by 47 publications

(33 citation statements)

References 43 publications

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“…Due to information asymmetry, corporate greenwashing has been a common challenge worldwide, and efforts have been made to implement more explicit and strict corporate environmental information disclosure policies (Aragon‐Correa et al, 2019). For instance, the regulatory efforts in EU that mandating non‐financial disclosure have been effective at improving CSR disclosure effectiveness and supports the adoption of sustainable strategies (Cicchiello et al, 2022). In developing countries, policies to encourage the development of normative CSR promoting institutions are also adopted to enhance the capacity of CSR disclosure (Ali & Frynas, 2018).…”

Section: Discussionmentioning

confidence: 99%

Financial constraints and corporate greenwashing strategies in China

Xia

Chen

Yang

et al. 2023

Corp Soc Responsibility Env

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Corporate environmental responsibility, in response to the call for sustainable development, has become a critical ethical capital for companies to increase firm values and to obtain resources. However, this also gives rise to the concern of "greenwashing" that companies may selectively release environmental performance information to mislead the public and investors. Using the administrative environmental penalty data of all listed companies in China from 2017 to 2018, this research examines the corporate's greenwashing strategies. Our results show that greenwashing by listed companies in China is widespread, that only 13.6% environmental penalties have been disclosed by companies during our studied period. Companies choose to greenwash environmental performance mainly due to future demand for investment and financing, and companies with higher debt levels are found more likely to engage in greenwashing. Our findings suggest that it is not a rare practice for Chinese companies to risk their business ethics to pursue economic interests. It is necessary to enforce environmental information disclosure for listed companies in China and to increase their costs of unethical behaviors.

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Section: Discussionmentioning

confidence: 99%

Financial constraints and corporate greenwashing strategies in China

Xia

Chen

Yang

et al. 2023

Corp Soc Responsibility Env

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“…A review of empirical literature on corporate governance reveals that non-financial performance receives less attention than financial performance (Dwivedi and Jain, 2005; Mishra and Mohanty, 2014; Shahbaz et al ., 2020; Yermack, 1996) and the majority of studies are conducted in developed countries (Chams and García-Blandón, 2019; Cicchiello et al ., 2022; Nuber and Velte, 2021). However, a couple of studies have looked at the link between the corporate board and sustainability in emerging markets.…”

Section: Introductionmentioning

confidence: 99%

Sustainability disclosures and corporate boards: a stakeholder approach to decision-making

Yadav

Jain

2023

JAAR

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PurposeThe board of directors of an organization can contribute considerably to the transition to a sustainable global economy by accommodating environmental, social and governance (ESG) measures in the directors' business model. Along these lines, the purpose of this research is to understand the nexus between the board's structural attributes and sustainability disclosures in an emerging economy such as India.Design/methodology/approachThe authors investigate this link using the system generalized method of moments (SGMM) panel regression on a sample of firms from the National Stock Exchange (NSE) Nifty 100 Index from 2013 to 2020. This econometric framework controls endogeneity among the variables, which has been a gap in the previous studies.FindingsThe authors find that board structural attributes, like board size, gender diversity, chief executive officer (CEO) duality and independence, have little bearing on sustainability disclosures of Indian companies. However, the board of directors, through the board's company's social responsibility (CSR) committee, strives for sustainability practices in Indian organizations. The authors also find that larger companies are more willing to disclose on ESG efforts than smaller ones, but the financial performance of the smaller ones (as proxied by Tobin's Q) does not matter.Research limitations/implicationsThis study is restricted to a sample of large cap listed companies and specific environment, resulting in the non-generalizability of the findings to different contexts because countries vary in their state of economic development, internal policy, regulations and governance.Practical implicationsA mandated CSR committee has helped Indian businesses to publicize their sustainability efforts. Besides the frontrunner in CSR regulations, Indian organizations have paid least attention to the environmental pillar of the ESG framework. Accordingly, the board of directors should put more emphasis on the environmental aspects of their business' sustainability efforts to help achieve sustainable development goals (SDGs) in the medium term and net neutrality in the long term.Originality/valueFrom the standpoint of an emerging economy like India, which has statutory CSR mandates for firms, this research adds a fresh perspective on the relationship between corporate governance and corporate responsibility by employing stakeholder theory, which is further substantiated by the use of system GMM as a robust methodology. This study also emphasizes the significance of a mandatory CSR committee as a facilitator of sustainability practices and reporting in emerging economies.

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“…In addition, corporate information transparency can also improve ESG performance, and the extent to which firms enhance the regulation of non-financial information disclosure can effectively improve ESG ratings (Cicchiello et al, 2022). In terms of macro-economic factors, Vural (2021) argues that under the circumstances of high economic uncertainty, the improvement of corporate ESG ratings has an 'insurance' effect, which helps firms to reduce risk-taking and maximize corporate interests.…”

Section: Literature Reviewmentioning

confidence: 99%

Non‐state shareholder governance and corporate sustainability: Evidence from environmental, social and governance ratings

Luo

Huang

2023

Sustainable Development

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We study how non‐state shareholder governance affects the performance of corporate environmental, social and governance (hereinafter ESG). We select all A‐shares state‐owned listed companies on the Shanghai and Shenzhen stock exchanges from 2011 to 2020 as the research sample. We find that non‐state shareholder governance can improve the ESG ratings by improving green innovation and information transparency. Further analysis shows that non‐state shareholder governance has a significant impact on the ESG ratings of polluting industries, high degree of marketization area, and high competitive industries; the enthusiasm of non‐state shareholders to participate in shareholders' meeting has a great impact on the ESG ratings. This research enriches the influence of non‐state shareholder governance and provides channels for state‐owned enterprises to improve ESG ratings. In addition, this article has important practical significance for state‐owned enterprises to deepen reform and strengthen environmental governance.

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Non‐financial disclosure regulation and environmental, social, and governance (ESG) performance: The case of EU and US firms

Cited by 47 publications

References 43 publications

Financial constraints and corporate greenwashing strategies in China

Financial constraints and corporate greenwashing strategies in China

Sustainability disclosures and corporate boards: a stakeholder approach to decision-making

Non‐state shareholder governance and corporate sustainability: Evidence from environmental, social and governance ratings

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