Business strategy heterogeneity and ESG disclosure

Our study investigates the influence of business strategy heterogeneity on corporate sustainability, measured by the Bloomberg ESG disclosure scores. Using a dataset of 6,976 observations from U.S. non-financial firms over the 2005-2019 period, we find a significant negative relationship between firms adopting a prospector strategy and their ESG disclosure scores. Firms emphasizing aggressive growth, innovation, and risk-taking tend to have lower ESG scores compared to those with defender and analyzer strategies. Further, the negative association between a prospector strategy and ESG scores intensifies under weaker information and governance frameworks and during periods of increased uncertainty. As COP28 promotes global collaboration on climate action, this study highlights the need for businesses to realign their strategies with the global sustainability agenda.