Investigating How Mandatory Sustainability Reporting Influences Corporate Governance Effects on ESG Performance: From Obligation to Impact for Sustainable Development

Gianluca Vitale, Sebastiano Cupertino, Giovanni Schiuma and Ciro Troise

Corporate Social Responsibility and Environmental Management, 2025, vol. 32, issue 5, 6261-6282

Abstract: Under the current global institutional endorsement for corporate sustainability, understanding if companies are effectively improving their ESG performance represents a key topic. Therefore, this research examines whether and how mandatory sustainability reporting affects companies' environmental and social performance. The study also explores how sustainability reporting regulation influences the relationship between corporate governance mechanisms and ESG performance. The analysis adopts a two‐stage regression approach using a sample of 840 worldwide companies. The empirical findings are interpreted through institutional logics. The evidence underscores the positive effect of mandatory sustainability reporting on ESG performance. The combination of mandatory sustainability reporting with board gender diversity and board meetings promotes the pursuit of sustainability goals. Conversely, when mandatory sustainability reporting is paired with incentive systems, there is a shift towards traditional market logic. These results present intriguing policy and managerial implications.

Date: 2025
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https://doi.org/10.1002/csr.70025

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Persistent link: https://EconPapers.repec.org/RePEc:wly:corsem:v:32:y:2025:i:5:p:6261-6282

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