The Politicization of Sustainability
In recent years, sustainability has become a central element of corporate communication. ESG reports have grown increasingly detailed, accompanying financial statements and responding to the demands of investors, regulators and public opinion. Yet not all companies communicate their environmental and social commitment with the same intensity. Even among firms operating in the same sector, with similar size or performance, significant differences emerge that cannot be explained solely by economic or regulatory factors.
It is within this context that my study “Does Politics Influence Environmental, Social, and Governance Disclosure? Empirical Evidence From US Listed Firms,” together with Gianluca Moretti and Simone Terzani (University of Perugia), published in Business Strategy and the Environment, is situated. The research offers an original perspective: to fully understand firms’ ESG disclosure choices, it is necessary to look beyond the numbers and consider the role of political ideology.
The Key Lies in Political Ideology
The study examines a large sample of US listed companies over the period 2013–2020 and starts from a fundamental distinction that is often overlooked: ESG performance and ESG disclosure are not the same thing. A firm may adopt advanced sustainability practices without communicating them extensively, or it may emphasize disclosure despite more modest results. The analysis therefore focuses not on what companies do, but on what they choose to report.
A first key finding concerns firms’ “internal” political orientation, measured through individual political donations made by employees. Companies characterized by a more liberal culture tend to display higher levels of ESG disclosure. Greater sensitivity to environmental and social issues translates into more extensive communication, consistent with shared internal values and stakeholder expectations.
When Firms and Territories Align
Firms do not operate in a vacuum, but within states characterized by different political orientations, which shape regulatory environments and social pressures
The most significant result emerges when the territorial context is taken into account. Firms do not operate in a vacuum, but within states characterized by different political orientations, which shape regulatory environments and social pressures. The study shows that companies with a liberal orientation disclose sustainability information more intensively when they are headquartered in politically liberal states. By contrast, the same firms tend to moderate their ESG disclosure when operating in states with a conservative majority.
In short, both internal values and external context matter. When corporate ideology and local political orientation are aligned, sustainability communication is stronger; when they diverge, disclosure strategies become more cautious and intermediate. Institutional context thus acts as either an amplifier or a constraint on transparency choices.
Implications for Investors and Policy Makers
These findings help explain the growing polarization of the sustainability debate in the United States. ESG disclosure is not merely an informational tool, but also a response to political and social expectations that vary substantially across states.
For investors, ESG data should not be interpreted uniformly, but read in light of the political and institutional context in which they are produced. For regulators, the study suggests that transparency policies are more effective when they take territorial differences into account. Ultimately, the research shows that sustainability does not speak a neutral language: to truly understand ESG reporting, it is necessary to look beneath the surface, where values, context and ideology continue to make a difference.
