Abstract
This article attempts to bring quantitative evidence of a firm’s sustainability reporting in terms of non-financial voluntary disclosures. The disclosures are made available through the annual report and Corporate Social Responsibility (CSR) and Global Reporting Initiatives (GRI) report. ESG score is a quantitative measure developed and disseminated by Bloomberg, covering about 120 Environmental, Social, and Governance aspects. The study’s research problem is to examine the effects of non-market transnational sustainability strategy on firm performance. The study presents an analysis of nearly 510 firm’s ESG scores across 17 countries for 2010–2018. The descriptive and inductive statistical analysis shows that ESG compliance is more pronounced in European companies. Simultaneously, Asian firms are more disciplined concerning the energy sector, and the Asiapacific counterpart is more inclined toward technology firms. The study shows that GRI and nonGRI companies differ significantly in their accounting performance (ROA and ROE) and market valuations (Tobin’s-Q). The environmental dimension appears intimidating across accounting and market-based firm performance, while the social dimension contributes adversely, and governance positively affects operational efficiency.
Highlights
Environmental, Social, and Governance (ESG) reporting has gained more popularity among organizations and socially responsible communities
The firm’s size shows an adverse effect, while sales growth positively contributes to return on assets and market value
The study aimed to explain the relationship between sustainability disclosures (SD) and the firm’s financial performance (FP)
Summary
Environmental, Social, and Governance (ESG) reporting has gained more popularity among organizations and socially responsible communities. Stakeholders and fund managers believe that firms with high ESG disclosures yield better operating performance, higher returns, and lower firm-specific risk. An attempt has been made to bring some novel quantitative evidence of a firm’s sustainability reporting in the form of non-financial voluntary disclosures. The quantitative and qualitative disclosures are made available through the annual and Corporate Social Responsibility (CSR) and Global Reporting Initiatives (GRI) reports. Journal of Business Economics and Management, 2022, 23(1): 218–237
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