Strategic <scp>ESG</scp> Disclosure as Sustainability Innovation: A Diffusion Perspective on Advancing Responsible Consumption and Production Toward <scp>SDG</scp> 12

ABSTRACT As global efforts to advance sustainable development intensify, aligning corporate practices with Sustainable Development Goal 12 on Responsible Consumption and Production (RCP) has become especially critical in emerging regions. In the MENA region, where rapid industrial growth often outpaces robust sustainability frameworks, the role of Environmental, Social, and Governance (ESG) disclosure in promoting RCP remains underexplored. This study investigates how ESG disclosure shapes sustainable production outcomes among 689 listed manufacturing firms from 2010 to 2022. Guided by Diffusion of Innovation theory, ESG disclosure is conceptualized as a strategic innovation adopted under pressures of relative advantage, compatibility, observability, and social influence. Dynamic panel estimation, propensity score matching with difference in differences, generalized propensity score methods, and additional robustness checks confirm that environmental and social disclosures significantly enhance sustainable production, whereas governance disclosure is often procedural and negatively associated with RCP. The ESG RCP relationship exhibits an inverted U shape, suggesting diminishing returns once disclosure surpasses an optimal threshold. Stratified analyses reveal sectoral and regional heterogeneity, while moderation tests demonstrate that institutional quality and ESG maturity reinforce the effectiveness of disclosure. Theoretically, the study advances DOI by introducing concepts of innovation asymmetry across ESG dimensions, non‐linear diffusion effects, and context‐dependent adoption. Practically, it provides tailored recommendations for industry‐specific standards, ownership‐sensitive strategies, regional harmonization, and incentive‐based regulation to strengthen ESG's transformative role in advancing SDG 12 in emerging economies.