Climate Governance and Sustainability Reporting

In this study, we examine how climate governance influences sustainability reporting among U.S. nonfinancial firms. Our results show a positive relationship between climate governance practices (such as CSR committees, executive environmental incentives, CSR audit reports, UN Global Compact membership, and GRI reporting adherence) and sustainability reporting. Firms using these practices produce more transparent reports, reducing information asymmetry and benefiting stakeholders. Climate governance supports reliable sustainability reporting and helps firms manage climate-related risks in line with stakeholder expectations. These findings are valuable for investors seeking firms with strong climate governance, supporting portfolio choices that balance returns with environmental responsibility. Such understanding also reduces exposure to regulatory and reputational risks from poor ESG performance. Policymakers can draw on these results to design regulations that encourage climate governance practices, improve reporting standards, and advance sustainability efforts across industries.