What Drives ESG Disclosure in Indian Listed Firms? An Empirical Analysis of Governance Determinants.

Abstract

This paper revisits and strengthens an empirical inquiry into the determinants of environmental, social and governance (ESG) disclosure among Indian listed companies. The central objective is to understand whether selected corporate characteristics - especially profitability, market performance, ownership composition and financial risk - help explain variation in the level of ESG reporting. Rather than treating disclosure as a purely symbolic exercise, the study approaches ESG communication as a strategic response to investor expectations, stakeholder pressure, regulatory developments and the search for corporate legitimacy in a competitive market.
The empirical setting is India, where large listed firms have faced growing expectations to report on social responsibility, governance practices and sustainability-related actions. Using annual reports and sustainability reports of major companies listed on the Bombay Stock Exchange, the study evaluates the extent of ESG disclosure through a structured index derived from the Global Reporting Initiative (GRI), Clause 49 of the listing agreement and prior scholarship on disclosure practices. The final sample consists of 82 non-financial firms.
The findings suggest that profitability is the most consistent positive determinant of ESG disclosure. Larger firms also disclose more extensively, indicating that resource availability, visibility and public scrutiny matter. The evidence for market performance is mixed across model specifications, while foreign institutional investors' stake and leverage show negative but statistically weak associations. Taken together, the results imply that ESG disclosure in India is shaped less by ownership pressure alone and more by internal financial strength and organizational scale. The paper concludes that stronger disclosure is most likely when firms possess both the capacity and the incentive to communicate non-financial performance in a credible and systematic manner.
The findings have practical implications for corporate managers seeking to improve ESG performance, investors evaluating long-term business sustainability, and policymakers designing frameworks to enhance corporate disclosure practices. Strengthening governance structures, encouraging transparency, and promoting sustainable business strategies can help organizations improve the quality of ESG reporting and build greater stakeholder trust.