Mandatory CSR and Sustainability Reporting: Economic Analysis and Literature Review

Abstract

This study collates potential economic effects of mandated disclosure and reporting standards for corporate social responsibility (CSR) and sustainability topics. We first outline key features of CSR reporting. Next, we draw on relevant academic literatures in accounting, finance, economics, and management to discuss and evaluate the potential economic consequences of a requirement for sustainability reporting for U.S. firms, including effects in capital markets, on stakeholders other than investors and on firm behavior. We also discuss issues related to the implementation and enforcement of CSR and sustainability reporting standards as well as two approaches to sustainability reporting that differ in their overarching goals and materiality standards. Our analysis yields a number of insights that are relevant for the current debate on mandatory CSR and sustainability reporting. It also points scholars to avenues for future research.

Keywords: Transparency, Regulation, SASB, GRI, Standard setting, Accounting standards, Mandatory disclosure, Environmental, social and governance (ESG)

JEL Classification: F30, G38, K22, L21, M14, M41, M48