Working Paper | HBS Working Paper Series | 2012

The Consequences of Mandatory Corporate Sustainability Reporting

by Ioannis Ioannou and George Serafeim


We examine the effect of mandatory corporate sustainability reporting (MCSR) on several measures of social responsibility using both country and firm-level data. Using data for 58 countries, we show that after the adoption of MCSR laws and regulations, the social responsibility of business leaders increases and both sustainable development and employee training become a higher priority for companies. Moreover, for companies in countries with MCSR, corporate governance improves and on average, companies implement more ethical practices, bribery and corruption decrease, and managerial credibility increases. These effects are larger for countries with stronger law enforcement and more widespread assurance of sustainability reports. We complement the country-level analysis using environmental, social, and governance metrics at the firm-level in conjunction with a differences-in-differences research design, and we find that for the treatment group, energy as well as waste and water consumption significantly decline, while investments in employee training significantly increase after the adoption of MCSR laws and regulations.

Keywords: sustainability reporting; mandatory reporting; corporate sustainability; corporate social responsibility; Integrated Corporate Reporting; Training; Corporate Governance; Governing Rules, Regulations, and Reforms; Governing and Advisory Boards; Law Enforcement; Management Practices and Processes; Corporate Social Responsibility and Impact; Environmental Sustainability;


Ioannou, Ioannis, and George Serafeim. "The Consequences of Mandatory Corporate Sustainability Reporting." Harvard Business School Working Paper, No. 11-100, March 2011. (Revised May 2012, October 2012.)