When Authenticity Doesn’t Pay: Validating an ESG Communication Authenticity Framework and Explaining Stakeholder–Investor Decoupling

Yiu-Fai Chan (), Lawrence M. Ngoe, Moshood Olatunde Oladapo, Godswill Osemeke and Imran Akhtar
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Yiu-Fai Chan: International Foundation Year, Salford Languages, University of Salford, Maxwell Building, Salford M5 4WT, UK
Lawrence M. Ngoe: Business Management and MRes Leadership and Strategy, Greater Manchester Business School, University of Greater Manchester, Great Moor Street, Bolton BL1 1SW, UK
Moshood Olatunde Oladapo: School of Leadership, Marketing and Management, Faculty of Business and Law, De Montfort University, Dubai Internet City, Building 12, Dubai 501870, United Arab Emirates
Godswill Osemeke: Business Management and MRes Leadership and Strategy, Greater Manchester Business School, University of Greater Manchester, Great Moor Street, Bolton BL1 1SW, UK
Imran Akhtar: Business Management and MRes Leadership and Strategy, Greater Manchester Business School, University of Greater Manchester, Great Moor Street, Bolton BL1 1SW, UK

Sustainability, 2025, vol. 17, issue 19, 1-38

Abstract: Environmental, Social, and Governance (ESG) communications have proliferated across Fortune 500 companies, yet no validated frameworks exist for systematically distinguishing authentic from superficial positioning. This study develops and validates the Dynamic Authenticity Evaluation Model (DAEM), measuring three interactive dimensions of ESG communication authenticity: operational alignment, temporal consistency, and communication specificity. Through dual-evaluator protocols applied to eight mega-cap companies, DAEM achieves excellent inter-rater reliability (ICC = 0.85; Krippendorff’s α = 0.83). An event study analysis across sixteen major ESG announcements reveals no significant correlation between communication authenticity and abnormal stock returns (r = 0.289; p = 0.491), with effects being bounded below ±0.30% cumulative abnormal returns through equivalence testing. Preliminary stakeholder analysis suggests differential authenticity sensitivity, with employee engagement showing a stronger association with DAEM scores (r = 0.423) than market reactions (r = 0.289). Results indicate that authentic ESG communications influence non-market stakeholders more than short-term stock prices, suggesting that market value creation requires operational rather than symbolic approaches, while authentic communication remains important for stakeholder relationship management.

Keywords: ESG communication; authenticity measurement; stakeholder theory; market efficiency; framework validation; stakeholder–investor decoupling (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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