Virtue signaling vs. authenticity: ESG reporting for stakeholder engagement

This paper examines whether corporate ESG reporting genuinely reflects authentic sustainability commitments or serves as virtue signaling intended to secure legitimacy. To address this question, we employ a multi-study, multi-sample design that combines thematic, linguistic, and quantitative analyses of corporate sustainability communication. In Study 1, we map the thematic content of sustainability reports, revealing how firms emphasize environmental and social responsibility while often downplaying governance aspects. In Study 2, cluster analysis of the Corporate Knights Global 100 identifies three ESG signaling profiles, Environmental Stewards, Pragmatic Legitimizers, and Balanced Performers, highlighting heterogeneity in the ways firms frame their commitments. A comparative analysis of Fortune 500 companies demonstrates that authenticity and analytic tone do not differ significantly between sustainability exemplars and mainstream corporations, suggesting that sustainability reporting may be subject to homogenized rhetorical norms. In Study 3, a cluster analysis of Fortune 500 firms links ESG risk scores with financial variables, showing that large, high-asset firms often emphasize governance and environmental proxies as part of investor-oriented legitimacy strategies, whereas mid-sized firms adopt more balanced profiles. Collectively, the three studies demonstrate that while some firms integrate authentic sustainability commitments across ESG dimensions, others selectively emphasize measurable indicators, risking perceptions of greenwashing. By triangulating thematic, linguistic, and performance-based evidence, this paper advances understanding of how ESG communication simultaneously functions as a signaling device and a legitimacy-building mechanism, and it underscores the importance of distinguishing authentic engagement from virtue signaling in stakeholder evaluation.