Cepêda, CatarinaMonteiro, Albertina PaulaAibar Guzmán, Cristina2026-05-212026-05-212026-04-06Cepêda, C., Monteiro, A. P., & Aibar-Guzmán, C. (2026). When Sustainability Reporting Becomes a Strategy: The Impact of Financial Performance and Institutional Pressures From EU Sustainability Reporting Regulations on ESG Decoupling. "Corporate Social Responsibility and Environmental Management", 1-25. https://doi.org/10.1002/CSR.705691535-3958https://hdl.handle.net/10347/47331Mitigating environmental, social, and governance (ESG) decoupling is essential to advancing reliable sustainability disclosure and ensuring that ESG reporting fulfills its intended purpose. This study aims to provide critical insights into the organizational and contextual elements that could intensify or diminish ESG decoupling. Using a multi-theoretical framework, this study examines the impact of firm value and institutional pressures from the European Union's sustainability reporting directives on ESG decoupling. The empirical findings, based on a random-effects panel regression analysis of data from 3465 large companies from 2009 to 2023 (13,488 firm-year observations), indicate that firms with higher financial performance and market value are more likely to engage in ESG decoupling. Conversely, the results demonstrate that normative and coercive pressures from the European Union's sustainability reporting directives result in greater alignment between ESG disclosures and performance. These findings offer researchers, regulators, investors, stakeholders, and ESG rating agencies additional insight into ESG decoupling and carry significant policy implications.eng© 2026 The Author(s). Corporate Social Responsibility and Environmental Management published by ERP Environment and John Wiley & Sons Ltd. This is an open access article under the terms of the Creative Commons Attribution-NonCommercial License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited and is not used for commercial purposes.Attribution-NonCommercial 4.0 Internationalhttp://creativecommons.org/licenses/by-nc/4.0/Corporate sustainability reporting directiveESG decouplingFinancial performanceFirm valueNon-financial reporting directiveSustainability reporting5311 Organización y dirección de empresas5309 Organización industrial y políticas gubernamentalesjournal article10.1002/csr.705691535-3966open access