‘Mere Puffery’ or Credible Disclosure? The Real Effects of Adopting Voluntary ESG Disclosure Standards

59 Pages Posted: 25 Jul 2022 Last revised: 2 Nov 2022

See all articles by Khrystyna Bochkay

Khrystyna Bochkay

University of Miami Herbert Business School

Seungju Choi

University of Miami Herbert Business School

Jeffrey Hales

University of Texas at Austin - Department of Accounting

Date Written: July 20, 2022

Abstract

In this paper, we examine the factors associated with corporate adoption of voluntary disclosure standards for sustainability reporting and the consequences of such a commitment. Using data on companies’ voluntary adoption of sustainability standards developed by the Sustainability Accounting Standards Board (SASB), we find that peer behavior, sustainability-focused institutional ownership, company visibility, and performance are among the main determinants of SASB standards adoption. In terms of consequences, we find improvements in broader as well as more specific sustainability outcomes. Namely, we find that SASB standards adopters have fewer negative sustainability-related incidents and violations, higher sustainability ratings, lower Scope 1 emissions, lower toxic releases, and fewer work-related injuries. These results inform our understanding of the conditions under which voluntary sustainability standards are likely to be adopted by companies and the potential real effects of such voluntary adoption.

Keywords: sustainability reporting standards; SASB; environmental, social, and corporate governance (ESG) issues; voluntary disclosure

Suggested Citation

Bochkay, Khrystyna and Choi, Seungju and Hales, Jeffrey, ‘Mere Puffery’ or Credible Disclosure? The Real Effects of Adopting Voluntary ESG Disclosure Standards (July 20, 2022). Available at SSRN: https://ssrn.com/abstract=4167391 or http://dx.doi.org/10.2139/ssrn.4167391

Khrystyna Bochkay (Contact Author)

University of Miami Herbert Business School ( email )

5250 University Drive
Coral Gables, FL 33146-6531
United States

Seungju Choi

University of Miami Herbert Business School ( email )

P.O. Box 248126
Florida
Coral Gables, FL 33124
United States

Jeffrey Hales

University of Texas at Austin - Department of Accounting ( email )

Austin, TX 78712
United States
512-471-2163 (Phone)
512-471-3907 (Fax)

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