A Shift Beyond Compliance: The Role of Sustainability Strategic Plans in the European Context

ABSTRACT This research aims to examine the role of adopting sustainability plans in enhancing performance and reducing decoupling between reported information and actual outcomes. It investigates whether publishing sustainability plans can help companies align their actions with their sustainability goals. A quantitative methodology was employed, using panel regression analysis. The sample consisted of 990 European companies subject to the Non‐Financial Reporting Directive (NFRD) from 2018 to 2022. We applied legitimacy and signaling theory as theoretical frameworks to interpret our findings. The adoption of a sustainability plan is shown to improve performance in the following years, especially in environmental practices, while also reducing the risk of decoupling. By disclosing their sustainability plans, companies demonstrate a commitment to integrating ESG factors into their operations, thereby aligning with stakeholder expectations. This paper presents some implications. Theoretically, it contributes to the sustainability planning and CSR decoupling literature by demonstrating how voluntary practices beyond regulatory requirements can improve transparency and signal commitment to stakeholders. In practice, it provides firms with insights into how to use sustainability plans to guide actions toward sustainable development goals. For regulators, the findings suggest that greater disclosure of sustainability strategies can enhance transparency and drive performance improvements. This paper provides original contributions by investigating the effects of sustainability planning on performance and decoupling within the context of European companies. It offers insights for academics, decision‐makers, and regulators aiming to improve the alignment between sustainability goals and actual practices.