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Relationships between ESG Disclosure and Economic Growth: A Critical Review

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  • Bertrand Kian Hassani

    (QUANT AI Lab, C. de Arturo Soria, 122, 28043 Madrid, Spain
    Department of Computer Science, University College London, Gower St., London WC1E 6EA, UK
    CES, MSE, Universite Panthéon Sorbonne, 106-112 Boulevard de l’Hôpital, 75013 Paris, France)

  • Yacoub Bahini

    (QUANT AI Lab, C. de Arturo Soria, 122, 28043 Madrid, Spain)

Abstract

The literature on the relationship between ESG disclosure and economic growth is relatively non-existent. Thus, this paper highlights the importance of taking this relationship into account in current sustainable policies. The main objective of extra-financial Disclosure is to mitigate Information Asymmetry. During this discussion, we show that ESG disclosure may not reduce information asymmetry as intended. We also show that complete extra-financial disclosure targeted by current policies is not optimal. There is an optimal disclosure threshold depending on the level of sustainable development of the country, the size of the companies and their development potential. Moreover, current ESG disclosure policies direct economies towards less polluting sectors, which is not necessarily optimal from an economic standpoint and could negatively affect economic activity and, therefore, the population’s well-being. We also provide some policy implications and suggestions for future research on the ESG disclosure literature.

Suggested Citation

  • Bertrand Kian Hassani & Yacoub Bahini, 2022. "Relationships between ESG Disclosure and Economic Growth: A Critical Review," JRFM, MDPI, vol. 15(11), pages 1-23, November.
    • Handle: RePEc:gam:jjrfmx:v:15:y:2022:i:11:p:538-:d:977524
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    1. Jing Zhang & Ziyang Liu, 2023. "Study on the Impact of Corporate ESG Performance on Green Innovation Performance—Evidence from Listed Companies in China A-Shares," Sustainability, MDPI, vol. 15(20), pages 1-18, October.
    2. Wang, Xiaoyuan & Wang, Jiahaoran & Guan, Weimin & Taghizadeh-Hesary, Farhad, 2023. "Role of ESG investments in achieving COP-26 targets," Energy Economics, Elsevier, vol. 123(C).
    3. Mithilesh Gidage & Shilpa Bhide, 2025. "ESG and economic growth: Catalysts for achieving sustainable development goals in developing economies," Sustainable Development, John Wiley & Sons, Ltd., vol. 33(2), pages 2060-2077, April.
    4. Liping Wang & Yuqi Shang & Shuqin Li & Chuang Li, 2023. "Environmental Information Disclosure-Environmental Costs Nexus: Evidence from Heavy Pollution Industry in China," Sustainability, MDPI, vol. 15(3), pages 1-21, February.
    5. Benjamin Gidron & Kfir Bar & Maya Finger Keren & Dalit Gafni & Yaari Hodara & Irina Krasnopolskaya & Alon Mannor, 2023. "The Impact Tech Startup: Initial Findings on a New, SDG-Focused Organizational Category," Sustainability, MDPI, vol. 15(16), pages 1-26, August.
    6. Elsayih, Jibriel & Amraaiyid, Abdelmuttalab & Bugshan, Abdullah, 2025. "Economic growth and carbon disclosure: Does board composition matter?," Research in International Business and Finance, Elsevier, vol. 73(PA).

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