Factors Affecting Corporate Environmental, Social and Governance (ESG) Reporting: A Literature Review

Abstract

This study aims to further explore the factors that influence corporate environmental, social, and governance (ESG) reporting in public listed companies (PLCs) around the world. The information was gathered from prior studies, which were conducted globally. The results are in line with the legitimacy theory, which holds that companies should disclose more ESG information in order to justify their continued existence. Discussion and findings in this study are significant to businesses and stakeholders, as well as policymakers. While businesses may think of ways to improve ESG reporting in order to compete on the global stage, stakeholders may put pressure on businesses to reveal more information about ESG, and also on policymakers to create an egalitarian framework on ESG that is suitable for businesses in their respective regions. The findings suggest that several factors have played a crucial role in influencing PLCs to disclose ESG reporting in their annual reports. The factors include company size, profitability, board of directors’ attributes, economic sustainability performance (ESP), financial leverage, audit committee external members, and the existence of a female director (or directors) on the corporate board. Most prior studies have found that these determinants have positive relationships with the tendency of PLCs to include ESG aspects in their annual report.