Investigating the influence of corporate sustainability policies on ESG performance: empirical evidence from agri-food companies in Taiwan

Abstract

Agricultural activities cause 18 Gt CO₂ per year, highlighting the significant environmental impact of farming practices. In Taiwan, the Financial Supervisory Commission enforced an ESG policy in 2018, requiring listed companies to disclose sustainability reports. The objective of this study is to investigate different dimensions of ESG performance of the agri-food companies and to estimate the impact of corporate sustainability policy on individual firms’ ESG performance. However, whether mandatory sustainability disclosure leads to substantive improvements in ESG performance or merely induces symbolic compliance remains an unresolved issue in the literature, particularly in the agri-food sector and in the Asia-Pacific regions. Using the Taiwan Economic Journal (TEJ) database and a Differences-in-Differences model, this study examines how the ESG performance of these companies changed due to the sustainability reporting policy. Results show improved ESG performance, attributed to organizational behaviors of legal compliance and imitation. The study suggests the need for ESG policies to focus not just on increasing sustainability reports but also on incorporating robust disclosure indicators for high-quality reports. By distinguishing between mandatory and voluntary disclosure, this study contributes to the debate on whether sustainability disclosure leads to real ESG improvements or symbolic compliance, and discusses implications for improving disclosure quality.