Seeking credibility in environmental, social, and governance reporting

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Abstract

Prior studies warn that environmental, social, and governance (ESG) reporting can mask poor sustainability performance and artificially inflate company reputations, but the extant literature offers few solutions to this problem that do not involve regulatory reform (Cooper & Owen, 2007; Hess & Dunfee, 2007; Patekar & Mahajan, 2025). This study contributes to this research gap by exploring ways that managers can improve the credibility of their ESG reporting in a voluntary disclosure environment. Our mixed methods research design leverages data on disclosure, goal setting, goal performance, and assurance collected through a content analysis of the sustainability reports for a sample of publicly traded U.S. companies following the Global Reporting Initiative (GRI) reporting framework from 2013–2019. Our quantitative analyses suggest that ESG ratings (Sustainalytics) are positively associated with the number of sustainability topics disclosed (disclosure breadth), a decrease in economic disclosures, and an increase in environmental disclosures (disclosure depth), setting environmental goals, and successfully reaching sustainability targets. However, we see no association between ESG ratings and goal failure rates or the use of higher-quality auditors. These findings may be especially relevant for managers making decisions about sustainability strategy, disclosure, and assurance, and for ESG investors seeking to identify credible firms for sustainability-focused investment.

Keywords: Sustainability, Non-Financial Disclosure, ESG, Corporate Social Responsibility, Goal Setting, Audit Quality

Authors’ individual contribution: Conceptualization — M.F.H. and A.M.H.; Methodology — A.M.H.; Formal Analysis — M.F.H. and A.M.H.; Data Curation — M.F.H.; Writing — Original Draft — M.F.H. and A.M.H.; Writing — Review & Editing — M.F.H.; Supervision — M.F.H.

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

JEL Classification: M40, M14, M48

Received: 31.07.2025
Revised: 21.11.2025; 05.02.2026
Accepted: 25.02.2026
Published online: 27.02.2026

How to cite this paper: Hess, M. F., & Hess, A. M. (2026). Seeking credibility in environmental, social, and governance reporting. Corporate Governance and Sustainability Review, 10(2), 30–43. https://doi.org/10.22495/cgsrv10i2p3