article · Business Strategy and the Environment
This research investigates how environmental, social, and governance (ESG) disclosures influence the adoption of circular economy (CE) practices in manufacturing firms within Sub-Saharan Africa. Using data from 320 firms between 2010 and 2022, the study found that environmental and social disclosures positively impact CE adoption. However, governance disclosure showed a negative effect, attributed to weak regulatory frameworks. Corporate sustainability committees were identified as crucial mediators, translating ESG commitments into strategic actions, while eco-innovation acted as a moderator, amplifying the positive impact of ESG disclosures on CE implementation. The findings highlight the need for stronger regulatory frameworks and corporate investment in eco-innovation and sustainability governance.
This study is important because it clarifies how businesses in emerging markets can effectively transition to a circular economy. By understanding the specific roles of ESG disclosures, sustainability committees, and eco-innovation, policymakers and companies can develop more targeted strategies to foster sustainable business practices and economic resilience.
The abstract suggests pathways for businesses and policymakers to accelerate circular economy adoption. Companies can use these insights to refine their ESG reporting, invest in eco-innovation, and establish sustainability committees to drive strategic change. Policymakers can leverage the findings to design more effective regulatory frameworks and enforcement mechanisms for corporate sustainability reporting. This is applied research, offering actionable recommendations for immediate strategic and policy adjustments.
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ABSTRACT As businesses increasingly integrate sustainability into corporate strategy, the role of environmental, social, and governance (ESG) disclosure in driving circular economy ( CE ) adoption has garnered significant attention. However, the mechanisms through which ESG disclosure facilitates CE transitions remain underexplored, particularly in emerging economies such as sub‐Saharan Africa (SSA). This study examines the synergistic roles of corporate sustainability committees as mediators and eco‐innovation as a moderator in strengthening the ESG– CE relationship. Using a panel dataset of 320 manufacturing firms in SSA (2010–2022) and employing advanced econometric techniques, we address potential endogeneity and model biases. The findings reveal that environmental and social disclosures positively influence CE adoption, whereas governance disclosure exerts a negative effect due to weak regulatory frameworks and compliance inconsistencies. Corporate sustainability committees enhance the ESG– CE relationship by ensuring that ESG commitments translate into strategic sustainability actions, while eco‐innovation amplifies the impact of ESG disclosure, accelerating CE implementation. Notably, we observe significant heterogeneity in the effects of ESG disclosure on CE across regional and industrial variations. The findings remain robust across multiple sensitivity tests, confirming their reliability. Our results underscore the need for policymakers to strengthen ESG disclosure mandates and enforce corporate reporting frameworks to accelerate CE adoption. Furthermore, we recommend that corporations prioritize investments in eco‐innovation and integrate sustainability committees into their governance structures to reinforce strategic ESG– CE alignment. These insights offer valuable implications for business leaders, policymakers, and sustainability advocates in fostering a resilient and CE in SSA.
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DOI: 10.1002/bse.4278
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