Does Corporate Disclosure Improve Environmental Outcomes? Evidence from EU High-Polluting Industries after a Non-Financial Disclosure Push, and the Role of ESG

Abstract

In November 2022, the EU adopted the Corporate Sustainability Reporting Directive (CSRD) 1. This advanced its sustainability agenda. The directive imposed stricter non-financial reporting mandates on listed firms. This study evaluates real-world efficacy. We study publicly traded companies in high-pollution sectors across the EU. We examine whether mandated transparency translates into actual environmental mitigation. We use a difference-in-differences (DID) design. It helps isolate the policy's impact. Environmental performance is captured through two main variables. First, we calculate greenhouse gas emissions intensity. That is defined as metric tons of carbon dioxide equivalent (tCO₂e) per million Euros of revenue. Second, we rely on a 0–100 environmental score (EnvScore). We also bring ESG ratings into the DID framework. Then we run mediation analyses. For this, we use Bootstrap confidence intervals. Post-reform data shows a clear rise in corporate ESG scores. But tangible environmental outcomes are more complex. We see a downward trend in emission intensity. There are also marginal improvements in EnvScore. Yet these shifts lack strong statistical significance. The weak significance probably comes from the narrow post-policy observation window. Interestingly, the indirect path via ESG is more pronounced among firms with high board gender diversity. Our data points to a pattern. The policy has different timelines for different outcomes. New disclosure rules can boost internal management scores quickly. But cutting actual carbon emissions takes much longer.