Three Essays on ESG: Informal Scrutiny and Regulatory Pressures in the US, India, and the UK

This thesis examines how different institutional mechanisms—ranging from informal reputational scrutiny to formal regulatory enforcement—shape the credibility and consequences of firms’ environmental and sustainability conduct. Although sustainability reporting and responsible business practices have become central expectations of investors, regulators, and the public, persistent concerns about greenwashing and inconsistent disclosure quality have raised questions about whether firms’ sustainability responses are substantive or symbolic. The thesis situates these issues within a governance continuum that spans three institutional contexts: reputational pressure exerted by the business press in the United States, a prescriptive assurance-backed ESG disclosure regime in India, and statutory carbon and energy reporting requirements in the United Kingdom. Collectively, the three essays examine how informational and institutional forces influence firms’ behaviour, market valuation, and disclosure credibility. The first essay, Does Negative Environmental Media Coverage Drive Environmental Innovation? investigates whether adverse environmental news coverage operates as an informal governance mechanism shaping firms’ long-horizon strategic responses. Media scrutiny has become an increasingly salient source of reputational pressure for firms, yet it remains unclear whether such informal visibility is strong enough to prompt costly, long-term environmental innovation in response to the environmental shortcomings highlighted by negative press coverage. Using a panel of 3,300 US-listed firms from 2007–2021, the analysis combines RepRisk measures of negative media coverage with patent data from the USPTO and firm-level data from Compustat, Refinitiv, and BoardEx. Firm- and year-fixed-effects Poisson, OLS, and linear probability models with two-year lags reveal no statistically or economically significant relationship between negative coverage and green patenting. The results suggest that reputational scrutiny alone may not represent a sufficiently strong governance force to induce costly innovation-based responses, highlighting the media’s limited capacity to convert visibility into substantive change. The second essay, Market Reaction to Mandatory Standardised ESG Disclosures with Assurance, evaluates investor responses to India’s Business Responsibility and Sustainability Reporting Core framework—a regulation mandating standardized disclosure of ESG Key Performance Indicators with third-party assurance. To address persistent concerns about inconsistent ESG reporting and investor scepticism, regulators are increasingly prescribing standardised, outcome-based ESG KPIs supported by third-party assurance. India’s BRSR Core framework is among the most prescriptive initiatives globally, offering a unique setting to examine whether markets perceive such detailed, assurance-backed disclosure mandates as enhancing credibility or imposing compliance burdens. Combining a regression-discontinuity design with an event-study approach, the analysis of five regulatory announcements finds an average economic decline of 1.44% in cumulative abnormal returns for mandated firms; none of the effects are statistically or economically significant. The direction of response potentially suggests that investors likely perceived near-term compliance costs to outweigh informational benefits. Cross-sectional analyses show a weakly positive but statistically insignificant response for Big 4-audited firms, alongside non-significant negative reactions for Public Sector Undertakings and complex firms, consistent with differences in implementation capacity and internal control strength. The final essay, Carbon and Energy Disclosure Quality under the UK’s SECR Framework, develops a multidimensional Disclosure Quality Index capturing compliance, voluntary breadth, accuracy, assurance, and substantive orientation. Introduced as part of the UK’s Net Zero 2050 strategy, the SECR framework embeds mandatory carbon and energy disclosures within statutory reporting to enhance transparency and comparability. Yet early reviews suggest that while compliance is generally high, the credibility and depth of disclosures remain uneven. This essay addresses that concern by evaluating whether mandatory reporting under SECR produces credible, decision-useful information or reflects symbolic compliance. A manual review of 2024 annual reports for 100 FTSE 350 firms reveals near-universal compliance but considerable variation in disclosure depth and credibility. Regression analysis confirms firm size as the dominant determinant of quality, while profitability and growth opportunities affect only specific dimensions. The essay highlights the need for clearer guidance to support mid-cap firms and managerial attention to assurance preparedness and substantive reporting to improve consistency and transparency. Taken together, the three essays show that firms’ environmental and reporting outcomes are shaped by the interaction between institutional pressures, enforcement mechanisms, and organisational capacity. Informal scrutiny may heighten awareness of environmental accountability yet lacks the coercive power to drive costly, innovation-based change. Formal regulation, as illustrated by India’s assurance-backed framework, can enhance reliability and investor confidence but may entail short-term adjustment costs. Within mature mandatory regimes such as the UK’s SECR framework, high compliance coexists with persistent variation in disclosure quality, underscoring that substantive engagement ultimately depends on internal systems and commitment to transparency. Overall, the thesis contributes to understanding how reputational, regulatory, and organisational forces jointly shape the behavioural and economic consequences of ESG governance.<p></p>

Author dc:creator

• Nishi Joy (21041663)

• ESG
• Sustainability
• Non-Financial Disclosures
• Mandatory reporting

Statement dc:rights

• All rights reserved
• Open Access after 2027-12-01

Identifier

10779/exe.32531718.v1

OAI identifier oai:identifier

oai:figshare.com:article/32531718