ESG disclosure and controversy incidence: evidence from global energy firms

Unofficial AI-generated summary based on the public title and abstract. Not an official translation.

🔬研究者:System GMM approach addresses endogeneity in ESG-controversy relationship; offers cross-country evidence on institutional moderators.

🏢実務担当者:Prioritize structured, comparable ESG reporting (e.g., GRI) over volume; invest in internal controls and external assurance.

🏛政策担当者:Disclosure regulation effectiveness depends on institutional quality; strengthen monitoring and enforcement to reduce misconduct.

Purpose The global energy sector is central to the low-carbon transition but remains structurally exposed to Environmental, Social, and Governance (ESG) controversies. This study aims to examine whether greater ESG transparency mitigates – or instead, amplifies – observed controversy risk, and how national institutional quality shapes this relationship across countries. Design/methodology/approach Using an unbalanced panel of 141 listed energy firms (2018–2022), the study estimates dynamic two-step System generalized method of moments (GMM) models to account for persistence and potential endogeneity in controversy outcomes. The study tests whether ESG performance, disclosure modalities – sustainability reporting (SR), integrated reporting (IR) and external assurance – and disclosure standardisation (Global Reporting Initiative [GRI] alignment) are associated with ESG controversies, controlling for country-level governance, legal origin and culture. Findings SR is positively associated with observed controversies, consistent with a transparency–detection mechanism whereby disclosure increases visibility and stakeholder scrutiny. By contrast, disclosure standardisation – particularly GRI-aligned reporting – is associated with lower controversy incidence. Governance indicators linked to monitoring capacity strengthen the positive disclosure–controversy association, whereas stronger control of corruption is associated with fewer controversies. Research limitations/implications Controversy indicators capture only events that are detected and recorded and may therefore understate incidents in less transparent settings. Although the System GMM approach addresses important endogeneity concerns, some pillar-specific models show weaker diagnostics and should be interpreted with caution. In addition, the study does not capture assurance quality in sufficient detail, which may affect the estimated role of assurance mechanisms. Practical implications For managers in carbon-intensive industries, ESG disclosure should be treated as a governance instrument rather than merely a compliance exercise. Expanding disclosure volume without improving its quality may heighten controversy exposure by increasing visibility without strengthening credibility. Firms should therefore prioritise structured, comparable and verifiable ESG reporting, particularly through recognised frameworks such as the GRI, supported by robust materiality assessment, traceable indicators, reliable internal controls and credible external assurance. Social implications The results indicate that ESG controversies are embedded in institutional and regulatory environments rather than being determined solely at the firm level. Regulatory quality, voice and accountability, and corruption control shape whether ESG-related misconduct is detected and publicly reported, which implies that disclosure regulation is effective only when supported by credible monitoring and enforcement. Originality/value The energy sector provides a salient setting given its carbon intensity, regulatory scrutiny and material ESG exposure. Yet prior research has not examined how disclosure quality and standardisation shape controversy incidence across institutional contexts. This study addresses that gap.

• crossref https://doi.org/10.1108/ijesm-09-2025-0009first seen 2026-07-01 05:51:35 · last seen 2026-07-01 05:52:03