The effect of GRC Systems on Environmental Decoupling

This study investigates the influence of Governance, Risk, and Compliance (GRC) systems on the phenomenon of environmental decoupling, defined as the misalignment between firms’ environmental disclosure and actual performance. Drawing on agency and stakeholder theory, we examine whether board oversight of climate risks, crisis management systems, and an-ti‑corruption procedures reduce the disclosure–performance gap. Using a panel of 924 Europe-an companies across 20 countries and 18 industries (2015–2024), we find that board oversight and crisis management systems are positively associated with environmental decoupling, suggesting symbolic rather than substantive governance. In contrast, anti‑corruption procedures significantly mitigate decoupling, highlighting the importance of binding and enforceable governance mechanisms. The findings contribute to the debate on the credibility of sustainabil-ity reporting and offer implications for scholars, practitioners, and regulators seeking to strengthen the alignment between communication and operational realities.