The effect of social and ethical practices on environmental disclosure: evidence from an international ESG data
ISSN: 1472-0701
Article publication date: 27 August 2021
Issue publication date: 8 October 2021
Abstract
Purpose
Given the rising global interest in the environmental, social and governance (ESG) index, the purpose of this paper is to investigate the impact of social and ethical practices on the firm’s environmental disclosure level.
Design/methodology/approach
To test the study’s hypotheses, the authors applied linear regressions with a data panel using the Thomson Reuters ASSET4 and Bloomberg database from seven countries in analyzing data of 523 listed companies selected from the ESG index between 2005 and 2017. Similarly, as an extension of the research and to address the potential unobserved heterogeneity and the dynamic endogeneity, the authors exploited the dynamic dimension of the data set through the generalized moment method (GMM) and estimated the impact of the one-year lagged value of the environmental disclosure.
Findings
The empirical results indicate a growing interest in corporate social responsibility (CSR) and ethical practices over the past decade. Besides, companies with a strong social and ethical commitment obtain significantly higher environmental disclosure scores. The results found with the GMM technique indicate the existence of dependence and continuity in environmental disclosure over time.
Practical implications
The research enables the information user to assess the transparency of the company as well as the quality of the information disclosed on its environment and its future growth opportunities in a context where the approach of business ethics occupies a central position in business valuation. The reached results suggest that the institutional and/or cultural factors affect top management’s environmental reporting behavior regarding the quality of published information.
Originality/value
This paper explores, for the first time, the effect of the social and ethical practices of ESG companies with seven different nationalities as well as its dynamic effect on the adoption of an environmental transparency strategy.
Keywords
Acknowledgements
The authors would like to thank the Editor and the two anonymous referees of the “Corporate Governance: The International Journal of Business in Society” for their insightful comments that have greatly benefitted the paper.
Citation
Chouaibi, S. and Affes, H. (2021), "The effect of social and ethical practices on environmental disclosure: evidence from an international ESG data", Corporate Governance, Vol. 21 No. 7, pp. 1293-1317. https://doi.org/10.1108/CG-03-2020-0087
Publisher
:Emerald Publishing Limited
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