Insights from analyzing corporate environmental and social disclosure

Purpose This paper aims to investigate the potential mediating effect of environmental disclosure on the relationship between corporate governance and the disclosure of social information by disaggregating Bloomberg ESG (Environmental-Social-Governance) scores. The polluting level of a company is examined for its potential moderating effect. Design/methodology/approach The focus is on the S&P 500. A structural equation model (SEM) is proposed that considers the effects of governance board constructs on the voluntary disclosure of social information (S-score) mediated by the voluntary disclosure of environmental information (E-score). The model is fit separately for two groups of companies (high-polluting and low-polluting), and the path coefficients are compared. Findings Consistent with prior research, board independence, gender diversity, and size positively impact voluntary environmental disclosure; board age is found to have a significant but negative effect. The estimated path coefficient from E-score to S-score is strong, positive, and significant; environmental disclosure fully mediates the relationship between corporate governance and social disclosure. This path coefficient is significantly greater for those companies in the high-polluting group. Originality/value The findings indicate that high-polluting companies may engage in increased voluntary disclosure of social information as reputation insurance. E-score fully mediates the relationship between corporate governance and S-score more strongly for high-polluting companies, suggesting this group is more likely to engage in and report on socially responsible behaviors to deflect attention away from environmental performance (i.e. green deflecting ).