Sustainability Reporting and the Public Good

Abstract

To address global challenges such as climate change and biodiversity loss, companies are increasingly expected to balance the demands of capital providers with the need to contribute to the public good. In response, sustainability reporting regulations are progressively requiring companies to disclose information that allows stakeholders to evaluate their contributions to the public good. We conduct a pre-analysis of a large-scale experiment designed to investigate how two fundamental features of sustainability reporting—disclosure reach (i.e., internal vs. external reporting) and measurement approach (i.e., input-based vs. output-based metrics)—influence corporate public good contributions and allocative efficiency. We hypothesize that the impact of sustainability reporting on public good contributions depends on whether disclosure reach and measurement approach foster coordination both within and across firms. In our pre-analysis using chatbot participants, we find that internal information has a stronger effect than external disclosure on the likelihood of achieving the public good. We also observe that the measurement approach influences the degree of overinvestment. Our findings aim to contribute to the sustainability reporting literature by demonstrating how the design of reporting systems can shape economic behavior and support collective action on global challenges.