How is integrated reporting quality influential on ESG risk scores? Pillar-Based evidence from international banks

Abstract

The reporting quality and environment, social, and governance (ESG) scores have become critical in investment and trading decisions. Accordingly, this study finds out the association between Integrated Reporting Quality (IRQ), its pillars, and ESG risk (ESGR) scores of 33 international banks, having Sustainalytics’ ESGR scores and publishing integrated reports between 2020 and 2023. IRQ scores are calculated by considering “Fundamental Concepts”, “Guiding Principles”, and “Content Elements” pillars of IR framework. The findings show that IRQ and its pillars are associated with lower ESGR scores. Also, the robustness of the results is confirmed through green bond issuance and carbon dioxide (CO₂) emissions. Therefore, the critical contribution of this study is to empirically reveal the role of IRQ in each pillar and to relate them to ESGR. It introduces a multi-pillar scoring approach that provides a replicable framework for assessing IRQ and ESGR scores. By focusing on ESGR, this study suggests a risk-based perspective on IR and presents how reporting quality functions as a governance mechanism for mitigating sustainability-related risks. The results enable a better theoretical understanding of IR as both a risk mitigation and stakeholder communication mechanism and provides insights for regulators, investors, and institutions.