Green logistics performance and sustainability reporting practices of the logistics sector: The moderating effect of corporate governance

Abstract

Drawing on the signaling theory, this study investigates the association between green logistics performance and sustainability reporting. In addition to this direct link, whether corporate governance moderates this relation or not is tested. The analysis of data collected for 117 countries covers the period from 2007 to 2016. Primarily, the study provides robust evidence that green logistics performance has a significant and positive association with the existence and the number of sustainability reports within the logistics sector. This association is validated for the composite Logistics Performance Index (LPI) as well as all six individual logistics performance indicators. Furthermore, moderation analysis indicated that in weak corporate governance environments characterized by ineffective boards of directors, the logistics performance and sustainability reporting link is stronger. This means that sustainability reporting fills the gap arising from poor corporate governance. This study extends existing green supply chain management literature by testing, for the first time, the association between green logistics practices and sustainability reporting. It is hoped that it helps to align the logistics sector with more eco-friendly practices and alleviate growing concerns of environmental degradation it is assumed to cause. In the end, the study provides implications for sector representatives, supply-chain managers, and developing countries in particular. It suggests guidelines about how to improve each dimension of six LPI to contribute to the sustainable development of the sector. Moreover, as one of the dimensions of this study is sustainability reporting, communication of sustainable supply chain practices to customers and other stakeholders may help supply chain managers augment the competitive posture of companies in the market. The sector can benefit from the Global Reporting Initiative’s individual metrics including materials usage, energy efficiency, recycling, and waste management metrics in developing environmentally friendly supply chains. The findings are particularly relevant for developing countries which are quite low scorers in terms of LPI than developed countries. Engaging in green logistics practices and developing policies accordingly may help them attenuate growing international environmental concerns and overcome trade barriers in international trade. The highlighted dimensions of green logistics performance may foster the circular economy while promoting the overall economic development of the countries.