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30 pages, 967 KiB

Open AccessArticle

A Greener Paradigm Shift: The Moderating Role of Board Independence in Sustainability Reporting

by Abid Noor, Rohail Hassan, Costinela Fortea and Valentin Marian Antohi

Sustainability 2025, 17(11), 4776; https://doi.org/10.3390/su17114776 - 22 May 2025

Viewed by 248

Abstract

This study investigates the moderating role of independent directors on corporate boards in raising the ESG reporting for non-financial listed firms in Pakistan to strive for a greener revolution around the economy. A sample of 369 firms listed and operated on the Pakistan [...] Read more.

This study investigates the moderating role of independent directors on corporate boards in raising the ESG reporting for non-financial listed firms in Pakistan to strive for a greener revolution around the economy. A sample of 369 firms listed and operated on the Pakistan Stock Exchange (PSX) for a period covering 2012–2023 (both inclusive) have been taken out of a target population of 456 non-financial listed firms. The results are investigated using bivariate, multiple, and hierarchical regression analyses. This study has significant findings in the context of Pakistan and can be generalized to struggling economies around the globe. The interventional role of independent directors has significant findings for the full model. Findings from the Corporate Social Responsibility Strategy Score (CSRSS) are inconclusive irrespective of the measurement method used, i.e., environmental innovation score (EIS) or environmental pillar score (EPS). Environmental, Social, Governance Score (ESGS) has revealed a positive and significant impact when EIS is used as a performance variable, whereas when EPS is taken as a performance measure, the results are significant and negative. Under the lens of stakeholders’ theory, upper echelon theory, and agency theory, this study contributes to the corporate governance domain and the literature on environmental improvisation and ESG reporting. Researchers, statutory authorities, and academicians can benefit from it. The vital role of independent directors is the key to developing economies to strive for a sustained greener environment. This study is the first in the Asian and, specifically, Pakistani context to take on the interventional role of independent directors in promoting ESG reporting requirements for corporate greener revolution efforts. Full article

(This article belongs to the Special Issue Corporate Environmental Performance and Disclosure: Implications for Sustainability)

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19 pages, 301 KiB

Open AccessArticle

Does ESG Disclosure Matter for the Tax Avoidance–Firm Value Relationship? Evidence from an Emerging Market

by Mohammed Alomair and Abdelmoneim Bahyeldin Mohamed Metwally

Sustainability 2025, 17(9), 3836; https://doi.org/10.3390/su17093836 - 24 Apr 2025

Viewed by 695

Abstract

This study examined the impact of tax avoidance on firm value. Further, it investigated whether ESG disclosure moderates this relationship. This study examined the top 100 non-financial firms listed in the S&P/EGX ESG index over the period from 2018 to 2022. The sample [...] Read more.

This study examined the impact of tax avoidance on firm value. Further, it investigated whether ESG disclosure moderates this relationship. This study examined the top 100 non-financial firms listed in the S&P/EGX ESG index over the period from 2018 to 2022. The sample contained 80 companies with 400 firm-year observations. Statistical analysis was conducted using pooled ordinary least squares (OLS) and fixed effects regression models. The statistical analysis revealed a negative and significant impact of tax avoidance on firm value. Further, ESG disclosure was found to have a negative moderating impact as it eliminated the negative impact of the effect of tax avoidance on firm value, leading to a positive overall effect. These results carry important implications for regulators, investors, and shareholders in Egypt and other emerging markets, underscoring ESG disclosure’s pivotal role in enhancing firm value and reducing tax avoidance practices within the Egyptian market. To the best of our knowledge, this study represents one of the earliest empirical explorations into the moderating effect of ESG disclosure on the relationship between tax avoidance and firm value in an emerging market. By presenting empirical evidence from the Egyptian market, this research broadens the existing literature on tax avoidance and firm value, offering fresh perspectives on the influence of ESG disclosure. Early studies have primarily focused on the direct effect of ESG disclosure on firm value. Full article

(This article belongs to the Special Issue Corporate Environmental Performance and Disclosure: Implications for Sustainability)

31 pages, 1973 KiB

Open AccessArticle

The Choice of Carbon Labels and the Impact of Ambiguity Under Market Differences Based on a Game Framework

by Wenkang Yi, Hongli Liang and Zhaofu Yang

Sustainability 2025, 17(8), 3477; https://doi.org/10.3390/su17083477 - 14 Apr 2025

Viewed by 390

Abstract

As a carbon reduction tool that discloses the green quality information of products, a unified standard for the evaluation and identification of carbon labeling has not yet been established. Given the diverse market environments and the different types of carbon labels, selecting an [...] Read more.

As a carbon reduction tool that discloses the green quality information of products, a unified standard for the evaluation and identification of carbon labeling has not yet been established. Given the diverse market environments and the different types of carbon labels, selecting an appropriate carbon label can create greater value for both the businesses and the society. This paper constructs a game model involving green and non-green firms to explore the heterogeneous firms’ carbon label choices and green decisions under two market structures. Using a numerical comparative analysis, it examines the social value of carbon labeling schemes in various scenarios. The study finds that (1) enhancing consumer environmental awareness (CEA) and competition intensity contributes to economic and social benefits, while an increased ambiguity in carbon labeling may suppress system efficiency; (2) carbon labeling schemes always generate profits for green firms but do not necessarily benefit non-green firms; (3) in a monopolistic competition market, self-certified labeling (SCL) is more beneficial for improving social welfare, whereas the opposite holds in an oligopolistic competition setting, but in both market structures, third-party certified labeling (TCL) maximizes environmental benefits; and that (4) for the same type of carbon label, environmental improvements vary significantly across market structures, whereas firms’ carbon label choices have a relatively minor impact on environmental benefits. This research provides valuable managerial insights for firms’ green decision-making and carbon label standard selection in different markets. Full article

(This article belongs to the Special Issue Corporate Environmental Performance and Disclosure: Implications for Sustainability)

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17 pages, 945 KiB

Open AccessArticle

Defining Greenwashing: A Concept Analysis

by Matthew J. Spaniol, Evita Danilova-Jensen, Martin Nielsen, Carl Gyldenkærne Rosdahl and Clara Jasmin Schmidt

Sustainability 2024, 16(20), 9055; https://doi.org/10.3390/su16209055 - 19 Oct 2024

Cited by 5 | Viewed by 9579

Abstract

The lack of a shared, operant definition for greenwashing has led to fragmented scholarly research, unclear guidelines for practice, inconsistent enforcement, and reactive policy frameworks; resulting in ineffective efforts to combat its growth. Using concept analysis, this research establishes a composite definition for [...] Read more.

The lack of a shared, operant definition for greenwashing has led to fragmented scholarly research, unclear guidelines for practice, inconsistent enforcement, and reactive policy frameworks; resulting in ineffective efforts to combat its growth. Using concept analysis, this research establishes a composite definition for greenwashing by identifying the constitutive attributes sourced across 79 scholarly definitions. The analysis finds six requirements necessary for identifying greenwashing: a claim on environmental performance by a private sector organization marketing a product or a service, which cannot be substantiated, made with deceptive intent, and done to establish a competitive advantage. Fulfilling these criteria warrants an accusation of greenwashing. With the aim to prevent its further spread and misuse, the article provides a diagnostic tool for separating similar but often conflated concepts from greenwashing to organize scholarly research, provide guidelines for practitioners, and support regulators’ case analysis. Full article

(This article belongs to the Special Issue Corporate Environmental Performance and Disclosure: Implications for Sustainability)

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28 pages, 317 KiB

Open AccessArticle

Watchdogs or Enablers? Analyzing the Role of Analysts in ESG Greenwashing in China

by Yingxue Gao and Yan Chen

Sustainability 2024, 16(11), 4339; https://doi.org/10.3390/su16114339 - 21 May 2024

Cited by 8 | Viewed by 2281

Abstract

In this study, we investigate whether analysts in China can effectively function as watchdogs to monitor managerial ESG greenwashing practices or if they inadvertently play a role in fostering such practices. Analyzing a sample of 8498 annual records from 1282 firms listed on [...] Read more.

In this study, we investigate whether analysts in China can effectively function as watchdogs to monitor managerial ESG greenwashing practices or if they inadvertently play a role in fostering such practices. Analyzing a sample of 8498 annual records from 1282 firms listed on the Chinese A-share market from 2012 to 2022, our linear regression analysis in Stata reveals that firms with significant analyst coverage are more prone to ESG greenwashing, even after controlling for firm-level variables such as leverage (Lev), return on assets (ROA), and cash flow. This finding supports the analyst pressure hypothesis. Notably, the effect is particularly pronounced in poorly performing firms but diminishes when star analysts are involved. Furthermore, we examine the moderating effect of corporate reputation on the relationship between analyst coverage and ESG greenwashing. The results indicate that a robust firm reputation amplifies the impact of analyst scrutiny on ESG greenwashing, especially by raising stakeholder expectations. Our aim is not to undermine the role of analysts but to highlight the need for strengthened ESG regulations to enhance analyst oversight and reduce ESG greenwashing. While our findings, influenced by their Chinese context, may not be universally applicable across all regions, they offer valuable insights for emerging markets seeking to implement effective ESG practices. Full article

(This article belongs to the Special Issue Corporate Environmental Performance and Disclosure: Implications for Sustainability)

30 pages, 380 KiB

Open AccessArticle

Determinants of Global Banks’ Climate Information Disclosure with the Moderating Effect of Shareholder Litigation Risk

by Ahseon Lee, Jong Dae Kim and Seong Mi Bae

Sustainability 2024, 16(6), 2344; https://doi.org/10.3390/su16062344 - 12 Mar 2024

Cited by 3 | Viewed by 1928

Abstract

This paper explores the influence of a country’s institutional factors and internal corporate governance on banks’ voluntary climate finance disclosures. The analysis focuses on the world’s top 100 banks, examining the institutional and governance factors that shape TCFD disclosure practices. From an institutional [...] Read more.

This paper explores the influence of a country’s institutional factors and internal corporate governance on banks’ voluntary climate finance disclosures. The analysis focuses on the world’s top 100 banks, examining the institutional and governance factors that shape TCFD disclosure practices. From an institutional perspective, the research reveals a heightened level of climate financial disclosure in banks located in countries where investor protection is strong under the common law system and environmental performance is commendable. On the internal governance front, it is observed that the independence and diversity of the board of directors play a facilitating role in promoting such disclosure. Additionally, in countries where shareholder litigation is easily pursued, a moderating effect is observed wherein board independence paradoxically inhibits TCFD disclosure. This study stands as the first to explore the determinants of climate financial disclosure in global banks, confirming the driving forces behind such disclosures through institutional and stakeholder theories and providing crucial empirical evidence to enhance research on voluntary disclosure. Full article

(This article belongs to the Special Issue Corporate Environmental Performance and Disclosure: Implications for Sustainability)

22 pages, 981 KiB

Open AccessArticle

Window Dressing in Impression Management: Does Negative Media Coverage Drive Corporate Green Production?

by Kaijun Gan and Silin Ye

Sustainability 2024, 16(2), 861; https://doi.org/10.3390/su16020861 - 19 Jan 2024

Cited by 6 | Viewed by 2302

Abstract

This study addresses the calls for research attention on corporate greenwashing and analyzes an environmental strategy in corporate impression management. We assume that negative media coverage triggers impression motivation and causes firms to adopt environmental strategies for impression construction based on the two-component [...] Read more.

This study addresses the calls for research attention on corporate greenwashing and analyzes an environmental strategy in corporate impression management. We assume that negative media coverage triggers impression motivation and causes firms to adopt environmental strategies for impression construction based on the two-component model in impression management. Specifically, firms release credible signals, such as green investment, to cover concealed pollution emissions under the framework of a game with incomplete information. We posit that firms can select a window-dressing strategy under the pressures of negative media coverage by constructing two regression models, respectively. We also assess our underlying assumption of constraints from state ownership and institutional shareholdings by testing additional moderating relationships. Utilizing a sample of Chinese publicly listed firms from 2000 to 2010, our empirical results suggest that negative media coverage increases corporate green investment, but pollutant emissions are reduced correspondingly, and state ownership aggravates corporate window dressing while institutional shareholdings curb it. Our findings reveal the corporate social irresponsibility in environmental protection and sustainable development, and they offer important implications for firm stakeholders. Full article

(This article belongs to the Special Issue Corporate Environmental Performance and Disclosure: Implications for Sustainability)

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Review

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12 pages, 254 KiB

Open AccessReview

Sustainability Performance Reporting

by Teodora Maria Rusu, Antonia Odagiu, Horia Pop and Laura Paulette

Sustainability 2024, 16(19), 8538; https://doi.org/10.3390/su16198538 - 30 Sep 2024

Cited by 1 | Viewed by 4326

Abstract

Sustainability reporting is an essential tool for companies and organizations to assess and communicate their sustainability performance. Its importance derives from the need for transparency and accountability to stakeholders, including investors, customers, employees and local communities. The principles underlying an effective sustainability report [...] Read more.

Sustainability reporting is an essential tool for companies and organizations to assess and communicate their sustainability performance. Its importance derives from the need for transparency and accountability to stakeholders, including investors, customers, employees and local communities. The principles underlying an effective sustainability report include integrity, accuracy, comparability and clarity. The main purpose of the sustainability report is to provide a clear view of the economic, social and environmental impact of the organization’s activities, contributing to continuous performance improvement and alignment with international standards. The objective of our study is to analyze sustainability reporting and ESG (environment, social, governance) reporting, key steps and methods for measuring and reporting sustainability, and the sustainability policy criteria and reporting frameworks used internationally (GRI, IIRC, SASB, TCFD, ISO 26000, ISO 14016) in order to identify areas for further development to improve the relevance and effectiveness of sustainability reporting. The results obtained from our study enable a better understanding of how an organization reports its social, economic, and environmental impact, the differences in compliance with the international standards used, the main steps, and sustainability criteria followed. Our research highlights the necessary actions and steps through which sustainability reporting can become a more effective and relevant tool, contributing to real sustainable development and more responsible resource management. The usefulness of this report is reflected in many aspects: it facilitates informed decision making, enhances trust and reputation, helps identify risks and opportunities, and supports sustainable business strategies. The sustainability report is not only a means of reporting but also a catalyst for positive change, promoting responsible business practices and contributing to global sustainable development. Full article

(This article belongs to the Special Issue Corporate Environmental Performance and Disclosure: Implications for Sustainability)

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