Cuadernos de Economía

The Impact of Sovereign Wealth Funds on ESG Disclosure in Emerging Markets: The Moderating Effect of Financial Sustainability

  • Thamir S Al Barrak , King Faisal University, Accounting department, business School, Al-Ahsa,31982, Saudi Arabia.

Keywords:

ESG reporting, Disclosure, Sovereign Wealth Fund (SWF), Sustainability, Emerging markets.

Abstract

This research examines the impact of Sovereign Wealth Fund (SWF) ownership on corporate Environmental, Social, and Governance (ESG) disclosure, with an emphasis on the Saudi Public Investment Fund (PIF), one of the world's fastest-growing SWFs. Using a sample of Saudi firms spanning from 2016 to 2023, the results reveal that SWF ownership significantly enhances ESG disclosure in Saudi-listed corporations. The findings also show that corporate financial sustainability amplifies this positive association, suggesting that financially sound firms are more receptive to SWF-driven ESG initiatives. As part of additional analysis, the impact of SWF on ESG pillars as well as the effect of COVID-19 are also examined. To ensure robustness, Generalized Moments Method and 2SLS are employed, and the results remain consistent. These findings offer valuable insights for policymakers and stakeholders seeking to stimulate sustainable development and accountability in corporate practices.