ESG Disclosure and Firm Value in Emerging Markets: Separating Substance from Strategy

Abstract

Environmental, Social, and Governance (ESG) disclosure has grown from a niche investor concern into a mainstream corporate practice, with emerging market firms increasingly joining the wave. But adoption alone tells us little. The more pressing question is whether ESG disclosure in emerging economies actually creates firm value, or whether it is largely a signaling exercise that firms use to satisfy institutional expectations or sidestep regulatory obligations elsewhere. This paper examines that question by drawing on signaling theory, institutional theory, and a growing body of empirical evidence from emerging markets across Asia, Latin America, and Africa. Through three analytical lenses, namely value creation, institutional signaling, and regulatory arbitrage, the paper unpacks the mechanics of how ESG disclosure operates in low-governance environments. Real-world corporate cases from India, China, Brazil, and South Africa illustrate where trust deficits emerge between firms and their stakeholders. The paper concludes with a set of practical advisories for corporate managers tasked with implementing or overseeing ESG-related obligations inside their organizations.