Stakeholders and regulatory pressure on ESG disclosure

We focus on the impact of stakeholders' pressure on the levels of ESG transparency exhibited by companies operating under different regulatory frameworks – specifically, within voluntary or mandatory disclosure regimes – between 2012 and 2020. Our analysis encompasses European and US listed companies, each having taken distinct paths toward sustainability reporting. Europe underwent the transition to a mandatory disclosure regime with the implementation of the EU 2014 Non-Financial Reporting Directive, while the US adopted a market-based approach, often referring to disclosure frameworks established by non-governmental entities. Our findings reveal that, under the voluntary disclosure regime, higher pressure toward transparency is primarily driven by employee-oriented and environmentally sensitive companies. However, during the mandatory regime for European firms, regulatory pressure takes the place of the previously exerted pressure by stakeholders. US-listed firms are indirectly impacted by the European regulatory transition, exhibiting heightened levels of pressure on reporting demanded by stakeholders in environmentally sensitive industries, as well as by institutional investors. • We study the impact of stakeholders’ pressure on the ESG transparency under voluntary or mandatory disclosure regimes. • We investigate the impact of the NFR Directive on ESG transparency on European and US listed companies. • Under the voluntary disclosure regime, pressure is driven by employee-oriented and environmentally sensitive companies. • Under the mandatory regime the regulatory pressure has taken the place of that exerted by stakeholders. • US firms are affected by the European transition driven by environmentally sensitive firms and institutional investors.