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Exploring the Impact of ESG Factors on Business Practices and Performance: Towards Sustainable Disclosure

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A special issue of Sustainability (ISSN 2071-1050). This special issue belongs to the section "Economic and Business Aspects of Sustainability".

Deadline for manuscript submissions: 30 July 2026 | Viewed by 17173

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Special Issue Editor

Prof. Dr. Silvia Angeloni

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Guest Editor

Department of Economics, Management and Quantitative Methods, Università degli Studi di Milano, Milan, Italy
Interests: ESG factors; sustainability; accountability; business administration; corporate reporting; inclusion; gender issues; diversity

Special Issue Information

Dear Colleagues,

The exploration of Environmental, Social, and Governance (ESG) factors and their impact on business practices and performance lies at the intersection of corporate sustainability, ethical business practices, and financial performance. This issue is critical as it addresses the growing demand for businesses to integrate the paradigm of sustainability into their operations and decision-making processes. The purpose of studying this relationship is to evaluate how ESG practices influence corporate behavior, stakeholder engagement, and long-term profitability, as well as how they drive sustainable disclosure practices that foster transparency and accountability.

This Special Issue welcomes both theoretical and empirical studies, interdisciplinary approaches, and industry-focused case studies. It aims to bridge the gap between academic research and practical implementation, contributing to the ongoing dialogue about how businesses can leverage ESG factors for sustainable growth and accountability. The findings will be relevant to academics, policymakers, and practitioners, providing actionable insights for advancing the integration of ESG into mainstream business practices.

This topics of this Special Issue examine how organizations manage and disclose environmental, social, and governance factors, including carbon emissions, energy use, waste management, diversity, inclusion, gender equality, executive compensation, board diversity, and risk management.

The purpose of this Special Issue is the following:

To understand the mechanisms through which ESG integration shapes corporate strategy and performance.
To highlight the relationship between ESG practices and financial outcomes, including risk mitigation, market valuation, and access to capital.
To explore the development and impact of sustainable disclosure frameworks in promoting consistent and comparable ESG reporting.
To assess how ESG practices align with stakeholder expectations and contribute to the sustainable development goals (SDGs).

Prof. Dr. Silvia Angeloni
Guest Editor

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Submitted manuscripts should not have been published previously, nor be under consideration for publication elsewhere (except conference proceedings papers). All manuscripts are thoroughly refereed through a single-blind peer-review process. A guide for authors and other relevant information for submission of manuscripts is available on the Instructions for Authors page. Sustainability is an international peer-reviewed open access semimonthly journal published by MDPI.

Please visit the Instructions for Authors page before submitting a manuscript. The Article Processing Charge (APC) for publication in this open access journal is 2400 CHF (Swiss Francs). Submitted papers should be well formatted and use good English. Authors may use MDPI's English editing service prior to publication or during author revisions.

Keywords

business performance
corporate sustainability
Environmental, Social, and Governance (ESG)
ESG reporting standards
risk management
stakeholder engagement
sustainable disclosure
sustainability frameworks
Sustainable Development Goals (SDGs)
transparency and accountability

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Published Papers (9 papers)

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28 pages, 860 KB

Open AccessArticle

Toward a Universal Framework for Gender Equality Certification

by Silvia Angeloni

Sustainability 2026, 18(8), 3699; https://doi.org/10.3390/su18083699 - 9 Apr 2026

Viewed by 304

Abstract

This study presents a comparative analysis of five gender equality certification schemes alongside the ISO 53800 standard with the aim of distilling shared conceptual foundations and design principles that can inform progress toward Sustainable Development Goal (SDG) 5 on gender equality. The comparative analysis reveals marked heterogeneity in scope, design architecture, indicators, and transparency. Methodologically, the study draws on the relevant literature, documentary evidence, and semi-structured consultations with five experts in gender equality, diversity management, auditing, and ESG reporting. Building on the most effective and robust features across gender equality schemes, the study proposes a universal framework for gender equality certification. Under this framework, an ideal universal certification model should apply the same core requirements to both public and private organizations, while including simplified procedures tailored to small- and medium-sized enterprises (SMEs). Moreover, the model should rely on a limited set of key performance indicators (KPIs), focusing on the most material dimensions and prioritizing quantitative measures. It should also strengthen employee feedback mechanisms and enhance accountability in corporate governance. The framework should also pay attention to intersectional dimensions, extend responsibility across the value chain, and address the gender-related implications of artificial intelligence (AI). Importantly, an ideal universal gender equality certification should ensure a high level of transparency through the public disclosure of certified organizations, assessment criteria, KPIs, and levels or scores achieved. Furthermore, it should be supported by a free digital self-assessment tool and robust auditing arrangements, underpinned by a sufficiently large pool of accredited certification bodies and gender-balanced audit teams. Finally, it should undergo periodic review and align with Environmental, Social, and Governance (ESG) principles and other related SDGs. Full article

(This article belongs to the Special Issue Exploring the Impact of ESG Factors on Business Practices and Performance: Towards Sustainable Disclosure)

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24 pages, 337 KB

Open AccessArticle

The ESG Tipping Point: Nonlinear Effects and Thresholds in ESG Scores and Financial Performance of Selected African Firms

by Sami Ben Mim, Nawres Jellib and Fatma Mabrouk

Sustainability 2026, 18(4), 1741; https://doi.org/10.3390/su18041741 - 9 Feb 2026

Viewed by 602

Abstract

This study investigates the nexus between environmental, social, and governance (ESG) performance and corporate financial outcomes, with a focus on sustainable disclosure and Sustainable Development Goal (SDG)-aligned business practices in Africa. Based on a panel of 173 firms over the 2010–2022 period, the analysis employs the system generalized method of moments (SGMM) to address endogeneity and capture dynamic effects. Results indicate that ESG dimensions exert asymmetric impacts on firm performance: environmental and social scores significantly enhance market capitalization, while no robust positive association emerges for accounting-based performance measured by return on assets (ROA). Pronounced nonlinearities are observed as environmental and governance practices improve ROA only beyond critical engagement thresholds, underscoring the need for substantive and transparent ESG commitments to generate profitability gains. The social dimension follows an inverted U-shaped trajectory, suggesting diminishing returns when firms overinvest in social initiatives. The U-shaped relationship between the governance score and market capitalization shows that governance quality is a critical issue for investors in the financial markets. The heterogeneity of the identified thresholds, with governance requiring the highest level of engagement, offers new insights into the optimal design of ESG strategies. These findings highlight the crucial role of credible ESG disclosure in aligning corporate practices with stakeholder expectations, mobilizing sustainable capital, and advancing the Sustainable Development Goals in emerging markets. Full article

(This article belongs to the Special Issue Exploring the Impact of ESG Factors on Business Practices and Performance: Towards Sustainable Disclosure)

21 pages, 469 KB

Open AccessArticle

Corporate Environmental Disclosure, Corporate Governance, and the Cost of Equity: Evidence from Pharmaceutical Listed Companies in China

by Zeyi Zhao, Lin Sea Lau and Shiyi Wang

Sustainability 2026, 18(3), 1414; https://doi.org/10.3390/su18031414 - 31 Jan 2026

Viewed by 531

Abstract

As societal demand for sustainable development intensifies, corporate environmental performance has become a key consideration for investors in assessing risk and value. This study investigates the impact of corporate environmental disclosure on the cost of equity and the moderating role of corporate governance, using data from Chinese pharmaceutical listed companies between 2018 and 2022. Employing a firm- and time-fixed effects regression model, the results show that enhanced corporate environmental disclosure significantly reduces the cost of equity. Furthermore, corporate governance positively moderates this relationship, indicating that firms with more effective corporate governance experience a greater reduction in cost of equity from the enhanced disclosure. Robustness checks using a two-step system generalized method of moments and propensity score matching confirm these findings. This study provides empirical evidence on how corporate environmental disclosure improves capital market resource accessibility and underscores the critical role of corporate governance, offering practical implications for managers, investors, and policymakers. Full article

(This article belongs to the Special Issue Exploring the Impact of ESG Factors on Business Practices and Performance: Towards Sustainable Disclosure)

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48 pages, 651 KB

Open AccessArticle

Does ESG Rating Divergence Undermine the Insurance-like Effect of ESG? Evidence from Financial Restatements in China

by Qiming Pan and Huiying Jia

Sustainability 2026, 18(2), 795; https://doi.org/10.3390/su18020795 - 13 Jan 2026

Viewed by 879

Abstract

This study investigates the “insurance-like effect” of corporate Environmental, Social, and Governance (ESG) performance amid financial restatement events among Chinese listed firms and examines the moderating role of ESG rating divergence. Employing an event study methodology on a sample of 1552 financial restatement events in China’s A-share market from 2013 to 2023, we measure market reactions using the cumulative abnormal return (CAR) over a [−1, +1] day window. Our findings reveal that strong ESG performance significantly mitigates the negative market reactions triggered by financial restatements. However, this protective effect of ESG is significantly weakened by the inconsistency in ESG assessments among rating agencies, known as ESG rating divergence, particularly when such divergence is persistent. We argue that the underlying mechanism is that rating divergence creates signal conflicts, exacerbates information asymmetry, and erodes the credibility of ESG signals. This, in turn, undermines the stakeholder trust and moral capital that underpin the insurance-like effect. This research sheds light on the complex impact of ESG rating divergence on the value-protective mechanism of ESG and contributes new empirical evidence to the literature on ESG and its insurance-like effect, especially within the context of an emerging market. Full article

(This article belongs to the Special Issue Exploring the Impact of ESG Factors on Business Practices and Performance: Towards Sustainable Disclosure)

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22 pages, 1380 KB

Open AccessArticle

Machine Learning Classification of Return on Equity from Sustainability Reporting and Corporate Governance Metrics: A SHAP-Based Explanation

by Mustafa Terzioğlu, Aslıhan Ersoy Bozcuk, Güler Ferhan Ünal Uyar, Neylan Kaya, Burçin Tutcu and Günay Deniz Dursun

Sustainability 2026, 18(1), 194; https://doi.org/10.3390/su18010194 - 24 Dec 2025

Viewed by 882

Abstract

The aim of this study was to develop a model that classifies companies into high or low categories based on their return on equity (RoE), the most important indicator of financial performance, using sustainability and governance-related committee reports and reports shared with the public. As a sample, the RoE, sustainability, and governance variables of all 427 companies traded on the Istanbul Stock Exchange in 2024 were used. Using a 70:30 stratified split between the training and test sets, three tree-based models (XGBoost, LightGBM, and Random Forest) were used to perform a binary classification task. The findings show that tree-based models perform only slightly better than the naive majority class rule, and therefore, have limited overall classification power. A noteworthy finding from the study is that SHAP-based explainability analysis shows that the Corporate Governance Report (IMNG), the Integrated Report (IREP) and the existence of a Sustainability Committee (ICOM) rank higher in terms of SHAP-based global importance in the High RoE classification model, although their average contributions are small and, in the case of IMNG, predominantly negative for the probability of belonging to the High RoE class. Methodologically, the article moves away from traditional econometric methods based on ESG scores, instead combining a predictive classification structure with TreeSHAP-based explanations. These findings indicate a need for reporting practices that offer deeper content, clearer evidence of governance quality, and stronger data integrity to better support investors’ decision-making processes through sustainability and governance. Full article

(This article belongs to the Special Issue Exploring the Impact of ESG Factors on Business Practices and Performance: Towards Sustainable Disclosure)

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25 pages, 538 KB

Open AccessArticle

How Does ESG Performance Enhance the Export Competitiveness of Chinese Manufacturing?

by Jiatong Wu, Lisheng Yang, Ben Wang and Yameng Liu

Sustainability 2025, 17(21), 9684; https://doi.org/10.3390/su17219684 - 30 Oct 2025

Viewed by 1784

Abstract

As global attention to sustainable development grows, the role of Environmental, Social, and Governance (ESG) practices is becoming increasingly prominent across various industries, particularly in export-oriented sectors. This paper examines the impact of ESG performance on the export competitiveness of Chinese manufacturing enterprises. By analyzing data from 9641 A-share listed manufacturing companies between 2011 and 2021, along with ESG ratings from the Huazheng database, this study investigates how ESG performance influences export competitiveness through financing constraints and risk-taking behavior. In the baseline regressions, ESG performance is positively associated with both the export sophistication index (ESI, coefficient = 0.0132, p < 0.05) and the log of export value (EXPORT, coefficient = 0.0241, p < 0.01). The findings show that superior ESG performance significantly enhances export competitiveness by reducing financing constraints and increasing risk tolerance. Further analysis reveals that the effect of ESG performance is stronger in regions with poorer business environments and among firms with lower institutional investor ownership. This study provides empirical evidence on how Chinese enterprises can enhance their international competitiveness through ESG practices, offering valuable insights for policymakers and business leaders seeking to integrate ESG and boost export competitiveness. Full article

(This article belongs to the Special Issue Exploring the Impact of ESG Factors on Business Practices and Performance: Towards Sustainable Disclosure)

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20 pages, 600 KB

Open AccessArticle

Sustainable Finance and Corporate Performance: A Dynamic Panel Analysis of New York Stock Exchange Firms

by Alsideeq Saleem Mohammed Abu Ighrarah and Wagdi M. S. Khalifa

Sustainability 2025, 17(18), 8229; https://doi.org/10.3390/su17188229 - 12 Sep 2025

Cited by 1 | Viewed by 1440

Abstract

The incorporation of environmental, social, and governance (ESG) concerns into corporate finance has accelerated globally; nevertheless, empirical data about its effects in the U.S. context is still scarce. This research examines the impact of sustainable financing on the financial performance of non-financial enterprises listed on the New York Stock Exchange (NYSE) from 2008 to 2024. This study used the stakeholder theory and other theories to analyze four aspects of sustainable finance: green financing efforts, emission reduction strategies, sustainable product initiatives, and environmental investment initiatives. The study implemented a dynamic panel regression model with the two-step Generalized Method of Moments (GMM) to mitigate endogeneity and omit variable bias. The findings indicate that green finance, emission reduction strategies, and sustainable product efforts have a positive and significant impact on Return on Assets (ROA) and Return on Net Operating Assets (RNOA), demonstrating their effectiveness in enhancing financial performance. Conversely, environmental investment programs exhibited a strong and negative correlation with financial success, indicating immediate cost implications. These findings emphasize the significance of strategic planning in sustainability investments and reinforce the necessity for legislative incentives to assist enterprises throughout the transition. This study enhances the literature by providing U.S.-specific, component-level insights into the financial implications of sustainable financing, therefore offering pragmatic counsel for managers, investors, and regulators. Full article

(This article belongs to the Special Issue Exploring the Impact of ESG Factors on Business Practices and Performance: Towards Sustainable Disclosure)

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32 pages, 1956 KB

Open AccessArticle

The Connectivity Between Content Elements and SDGs in the South African Banking Industry

by Milan Christian de Wet and Milan Heckroodt van Wyk

Sustainability 2025, 17(6), 2572; https://doi.org/10.3390/su17062572 - 14 Mar 2025

Cited by 1 | Viewed by 1394

Abstract

Integrated thinking and connectivity have recently attracted particular attention in sustainability reporting. A firm’s reporting on its Environmental, Social, and Governance (ESG) practices should be connected to the other business functions to optimize the ESG information provided through integrated reports. Academic research on the connectivity between ESG information and other business functions is limited. Hence, the main aim of this study is to analyze and characterize the reporting connectivity between the Sustainable Development Goals (SDGs) and other business functions of South African retail banks. This is done using a thematic content analysis of the integrated reports of each bank in the sample from 2016 to 2023. The sample consists of the top five retail banks in South Africa that are listed on the Johannesburg Stock Exchange (JSE). Specifically, the researchers determine the number of occurrences where the SDGs are linked to other business functions through an iterative process. Furthermore, several Analysis of Variance (ANOVA) models are implemented to identify which content elements have the strongest connectivity to the SDGs as well as to identify which elements have the strongest linkage to the various content elements. The results show that SDGs are primarily linked to stakeholders, the business model, and performance. Furthermore, it was found that this sample of South African banks most prominently links these business functions to SDG 8, which aligns with the banks’ purpose of furthering economic development. Full article

(This article belongs to the Special Issue Exploring the Impact of ESG Factors on Business Practices and Performance: Towards Sustainable Disclosure)

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Other

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55 pages, 1031 KB

Open AccessSystematic Review

Greenwashing in Sustainability Reporting: A Systematic Literature Review of Strategic Typologies and Content-Analysis-Based Measurement Approaches

by Agnieszka Janik and Adam Ryszko

Sustainability 2026, 18(1), 17; https://doi.org/10.3390/su18010017 - 19 Dec 2025

Cited by 5 | Viewed by 6460

Abstract

This paper presents a systematic literature review (SLR) of research on strategic positioning of companies and the measurement of greenwashing in sustainability reporting. Its main aim is to synthesize and organize the existing literature, identify key research gaps, and outline directions for future studies. Drawing on a rigorous content analysis of 88 studies, we delineate strategic typologies of greenwashing in sustainability reporting and examine content-analysis-based measurement approaches used to detect it. Our SLR shows that most strategic typologies draw on theories such as legitimacy theory, impression management theory, signaling theory, and stakeholder theory. Several studies adopt a four-quadrant matrix with varying conceptual dimensions, while others classify strategic responses to institutional pressures along a passive–active continuum. However, the evidence suggests that to assume that companies uniformly pursue sustainability reporting strategies is a major oversimplification. The findings also indicate that the literature proposes a variety of innovative, content-analysis-based approaches aimed at capturing divergences between communicative claims and organizational realities—most notably, discrepancies between disclosure and measurable performance, and between symbolic and substantive sustainability actions, as well as the identification of selective or manipulative communication practices that may signal greenwashing. Analytical techniques commonly focus on linguistic and visual cues in sustainability reports, including tone (sentiment and narrative framing), readability (both traditional readability indices and machine learning–based textual complexity measures), and visual content (selective emphasis, imagery framing, and graphic distortions). We also synthesize studies that document empirically verified instances of greenwashing and contrast them with research that, in our view, relies on overly simplified or untested assumptions. Based on this SLR, we identify central theoretical and methodological priorities for advancing the study of greenwashing in sustainability reporting and propose a research agenda to guide future research. Full article

(This article belongs to the Special Issue Exploring the Impact of ESG Factors on Business Practices and Performance: Towards Sustainable Disclosure)

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