Author Abstract
As sustainability issues, also labelled environmental, social, and governance (ESG) issues, become financially material, companies, investors, and regulators are designing strategies and policies to improve sustainability disclosure and performance. In this paper, we outline a framework of how sustainability issues become financially material arguing that materiality is not a “state of being” but a “process of becoming.” Our framework could assist companies and investors to make resource allocation decisions based on expectations about future materiality, social entrepreneurs and NGOs to develop their theories of social change, and policy makers to design disclosure regulations. Moreover, our framework generates predictions about the conditions under which sustainability issues become financial material that could be empirically tested in the future.
Paper Information
- Full Working Paper Text
- Working Paper Publication Date: November 2019
- HBS Working Paper Number: HBS Working Paper #20-056
- Faculty Unit(s): Accounting and Management
