TriadicTrust Dynamics in ESG Governance: A Mechanism-Based Simulation of Institutional Capacity, Transparency, and Policy Uncertainty

Environmental, social, and governance (ESG) disclosure regimes are increasingly central to economic governance, yet similar frameworks can generate divergent trust outcomes across institutional contexts. This study develops an empirically anchored, mechanism-based computational simulation of a triadic trust system linking governments, firms, and the public through policy, compliance, ESG performance, information, and trust updating. Eight ideal-type regimes vary by institutional capacity, transparency, and policy uncertainty. Transparency has conditional effects: under strong institutional capacity, greater incorporation of current performance information reinforces government-related trust, whereas under weak capacity, it accelerates deterioration in public trust in government and firms’ trust in government. Public trust in firms remains comparatively resilient in the short run, but this resilience can weaken over longer horizons. Policy uncertainty has modest and non-uniform effects on government-related trust over the baseline horizon, yet under weak institutional capacity, it can substantially accelerate longer-horizon corporate-trust erosion. Realized policy volatility can also temporarily attenuate negative updating through a wait-and-see mechanism. Global sensitivity analysis identifies institutional effectiveness as the dominant influence on government-related trust and ESG performance. Overall, ESG legitimacy emerges from recursive interactions among institutional performance, information incorporation, stochastic disturbance, policy adaptation, and relational trust rather than from disclosure alone.