Plain Language, Real Impact: Evidence from an ESG Readability Experiment in China

As ESG disclosure frameworks become increasingly standardized across jurisdictions, a growing policy concern is whether individual investors can actually interpret and act upon the information presented. This issue is particularly acute in emerging markets like China, where sustainability reports remain lengthy, jargon-heavy, and difficult to process for non-professional audiences. This study examines whether improving the linguistic readability of ESG disclosures affects investment-related perceptions and intentions among individual investors. We implement a between-subjects experiment involving 232 Chinese participants, randomly exposed to either a high-readability or low-readability version of an ESG text excerpt. Findings reveal that clearer wording significantly enhances perceived informativeness, moral alignment, and investment intention. Notably, while prior literature suggests that cognitive and affective mechanisms should mediate such effects, we observe a direct impact of readability on intention without sequential mediation. The results offer both theoretical insights into investor cognition under linguistic constraints and practical implications for regulatory bodies seeking to reform ESG communication standards through plain-language mandates.