Innovation for Sustainability? Linking R&D to ESG Performance Through Disclosure Analysis

Abstract

This study investigates how research and development (R&D) investment influences firms’ environmental, social and governance (ESG) performance. While prior literature provides mixed evidence, little is known about this relationship when combining academic insights with disclosure-based analysis. The authors address this gap through a systematic review of peer-reviewed studies and a qualitative content analysis of Tesco’s annual reports from 2022 to 2024. Using a keyword-driven approach, R&D-related disclosures were coded into ESG categories, and textual similarity measures were applied to detect year-on-year repetition and potential ‘cheap talk’. The findings show that R&D contributes positively to environmental performance through low-carbon technologies and process innovations, while social outcomes remain limited and largely framed through workforce and customer engagement. Governance disclosures emphasise oversight but display high textual similarity across years, suggesting templated reporting. Overall, the study highlights the dual role of R&D as both a driver of sustainable innovation and a source of disclosure complexity. By linking the R&D–ESG literature with empirical evidence from corporate reporting, the paper provides theoretical and managerial insights into how innovation strategies can be aligned with sustainability objectives while avoiding symbolic communication.