Governance and sustainability: The role of environmental disclosures and board characteristics in environmental, social, and governance reporting

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Abstract

The purpose of the study is to investigate how environmental disclosure affects environmental, social, and governance (ESG) reporting, specifically in relation to emissions, innovation, use of resources, environmental controversy, and environmental products. It also looks at how specific firm attributes and board characteristics affect ESG reporting in three different industries. The analysis uses data for 8094 enterprises sampled from Asia and Europe between 2016 and 2021 that was gathered from secondary sources and taken from the Refinitiv Eikon database. According to the findings, proactive environmental investments, fines, and environmental expenses associated with ESG reporting are positively correlated. The findings also show that European businesses disclose environmental information at a higher degree than Asian businesses, which benefits their sustainability initiatives. Furthermore, sustainability indices have an adverse relationship with ESG reporting in Asia but a positive relationship with ESG reporting in Europe. Crucially, the findings show that various industries have varied relationships between sustainability reporting and environmental indicators. The study provides valuable insights for policymakers by highlighting the extent to which enterprises disclose their emissions, innovations, and resource use. Additionally, the study offers evidence on the role of corporate board members and how certain board characteristics as important mechanisms can improve the quality of ESG reporting making environmental disclosures useful and relevant.

Keywords: Environmental Disclosure, Environmental Pillar, ESG Score, Sustainability Reporting, Board Characteristics, Firm Specifics

Authors’ individual contribution: Conceptualization — T.E. and F.A.A.; Methodology — T.E. and F.A.A.; Investigation — A.A.E.; Resources — T.E. and F.A.A.; Writing — T.E., F.A.A., and N.H.S.F.; Supervision — F.A.A. and A.A.E.; Funding Acquisition — N.M.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: G30, Q01, Q56

Received: 25.11.2023
Accepted: 29.07.2024
Published online: 01.08.2024

How to cite this paper: Elsheikh, T., Almaqtari, F. A., Farhan, N. H. S., Mishra, N., & Ettish, A. A. (2024). Governance and sustainability: The role of environmental disclosures and board characteristics in environmental, social, and governance reporting. Journal of Governance & Regulation, 13(3), 162–176. https://doi.org/10.22495/jgrv13i3art14