ESG DISCLOSURE QUALITY, GREEN BOND ISSUANCE, AND CARBON REPORTING TRANSPARENCY ON NATIONAL SUSTAINABILITY PERFORMANCE:THE MEDIATING ROLE OF GREEN INVESTMENT FLOWS

Abstract

Purpose: This study investigates how national-level ESG disclosure quality, green bond issuance volume, and carbon reporting transparency collectively shape a country's overall sustainability performance over the period 2015–2024, with green investment flows serving as a theorized mediating mechanism.

Design/methodology/approach: A 30-country balanced panel dataset assembled from the Bloomberg ESG Database, the Climate Bonds Initiative, the CDP Carbon Disclosure Project, the World Bank World Development Indicators (WDI), and the Yale Environmental Performance Index (EPI). The study deploys a two-step system, the Generalized Method of Moments (GMM) estimator, to address endogeneity and unobserved heterogeneity.

Findings: ESG disclosure quality and green bond issuance positively and significantly predict improvements in national sustainability performance. Carbon reporting transparency amplifies this relationship by building credibility with international investors and multilateral agencies. Critically, green investment flows fully mediate the link between disclosure quality and sustainability outcomes, confirming that reporting initiatives converted into tangible capital mobilization to generate systemic environmental gains.

Research limitations/implications: The composite indices used for certain variables may embed measurement error. Future research should extend the panel horizon and incorporate subnational data for large heterogeneous economies.

Practical implications: Policymakers designing mandatory disclosure frameworks, particularly in emerging economies, should align ESG reporting requirements with green capital market development policies to unlock the full environmental dividend of disclosure reform.

Originality/value: This paper is among the first to integrate ESG disclosure, green bond issuance, and carbon reporting within a unified macro-panel framework and to formally identify green investment flows as the mediating channel through which reporting quality translates into national sustainability outcomes.