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Regulatory policy as strategic buffer: Strengthening sustainable futures and technological innovation

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  • Mohy-ud-Din, Kamran
  • Shahbaz, Muhammad
  • Khamdamov, Shoh-Jakhon

Abstract

This study investigates the strategic function of corporate sustainability reporting in advancing firm-level innovation amid evolving technological paradigms. Specifically, the study evaluates whether ESG performance, environmental sustainability, and carbon trading operate as strategic catalysts for technological innovation. To empirically test the proposed hypotheses, this study utilizes a panel dataset comprising 931 firms across G5 economies over the period of 2014-2024, yielding 10,241 firm-year observations. Our findings suggest that ESG disclosure potentially contributes to technological exports by signaling corporate commitment to sustainable and innovation-driven practices. Moreover, our study examines the interaction effect of regulatory policy on the nexus between corporate sustainability performance and technological innovation. Our findings further propose that more stringent emission caps compel G5 corporations to invest in licensed and low-carbon technologies, as a strategic response to regulatory compliance. Moreover, high-tech exports and corporate patent worth exhibited a strong positive response to ESG reporting, particularly when green governance surpassed the threshold levels of 60.130% and 59.240%, indicating optimal innovation under advanced sustainability governance. Collectively, findings underscore that implementation of rigorous sustainability practices serves as a critical driver of technological innovation.

Suggested Citation

  • Mohy-ud-Din, Kamran & Shahbaz, Muhammad & Khamdamov, Shoh-Jakhon, 2026. "Regulatory policy as strategic buffer: Strengthening sustainable futures and technological innovation," Technology in Society, Elsevier, vol. 86(C).
    • Handle: RePEc:eee:teinso:v:86:y:2026:i:c:s0160791x26001028
    DOI: 10.1016/j.techsoc.2026.103313
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