Corporate Sustainability Disclosure Research Articles

Board Flexibility in Diversity, Experienced CEOs and Corporate Sustainability Disclosure: Evidence from the Emerging Market

Board Flexibility in Diversity, Experienced CEOs and Corporate Sustainability Disclosure: Evidence from the Emerging Market

Corporate governance, financial performance and sustainability disclosure: Evidence from Indonesian energy companies

Corporate governance, financial performance and sustainability disclosure: Evidence from Indonesian energy companies

CSR disclosures in buyer-seller markets: Research design issues, greenwashing and regulatory implications, and directions for future research

Using a laboratory market experiment, De Meyst, Cardinaels, and Van den Abbeele (current issue) show that assurance of sustainability disclosures acts as a deterrent for “cheap talk” for report preparers who are incentivized to invest in sustainability initiatives. The study also shows that report users value sustainability investments more when reports about sustainability initiatives are assured and when the report preparers are incentivized to invest in sustainability initiatives. The study is both timely and relevant in light of the recent introduction of U.S. and international rules that mandate corporate sustainability disclosures in regulatory filings and independent assurance on these disclosures. My commentary discusses some research design issues regarding boundary conditions and the assurance manipulation, the implications of the fast-evolving regulatory landscape, and concludes with some directions for future research.

Does corporate sustainability disclosure mitigate earnings management: empirical evidence from Jordan

AbstractThis paper aims to investigate the relationship between sustainability disclosure practices and earnings management in the Jordanian context. Based on an analysis of 66 non-financial firms listed on ASE, spanning the period of 2017–2020. The findings revealed that companies' compliance with the disclosure of sustainability improves their ethical behavior, which limits earnings management practices and increases the reliability of their financial statements. The findings have implications for regulators, corporate executives, practitioners, policymakers, top management, and business partners. More corporate sustainability practices present more trustworthy information and more sustainable performance of the economic. To the best of the authors’ knowledge, this is the first study to examine the relationship between the extent of sustainability disclosure and earnings management in Jordanian firms. Moreover, two models were used for earnings management, which adds value to the existing literature.

When politics meets sustainability: the effect of independent directors' political connections on corporate sustainability disclosure in China

PurposeThis paper investigates the influence of political connections on sustainability disclosure in the context of China's Regulation 18.Design/methodology/approachThe study employs a quasi-experimental approach, utilizing difference-in-difference (DiD) analysis, dynamic DiD and propensity score matching to analyze the effects of politically connected independent directors on sustainability disclosure following the implementation of Regulation 18.FindingsCompanies with politically connected independent directors show an improvement in sustainability disclosures after Regulation 18. This effect is stronger for firms facing high political pressure or lacking alternative political power. Additionally, the increase in value from sustainability disclosures compensates for the loss of politically connected independent directors, indicating a positive value impact of sustainability disclosures.Originality/valueThis study provides novel insights into the corporate disclosure policy in China by investigating the impact of politically connected directors on sustainability disclosure. Additionally, it sheds light on the limitations of political power and its substitution effects within companies.

Is it the mere female directors or their attributes that matter for the quality of corporate sustainability disclosures?

AbstractThis study aims to inquire whether it is the mere female directors or their certain attributes that improve the quality of corporate sustainability disclosures (QCSD). Annual and sustainability reports are used to obtain data for 300 non‐financial Pakistani listed companies selected through stratified random sampling for the period 2012–2021. The study employed ordinary least squares with panel‐corrected standard errors to test research hypotheses. The findings that neither support “tokenism” nor “critical mass” assumptions revealed that firms with female directors on the board, regardless of how many, have better QCSD than others. Similarly, the proportion of female directors on the board and audit committee also showed a positive association with QCSD. The positive role of independent female directors and their experience was slightly more pronounced than the executive female directors and their experience in improving QCSD. Likewise, the positive effect of female directors' business‐related education was marginally higher than their non‐business education in improving QCSD. Furthermore, female directors' master's or above level of education had a significant positive, while their bachelor's or below level of education had no significant association with QCSD. The study offers several theoretical and practical implications.

Institutional Drivers of Voluntary Carbon Reduction Target Setting—Evidence from Poland and Hungary

Governments worldwide have launched climate policies to mitigate greenhouse gas emissions (GHG). These policies aim to enhance businesses to be active actors in the process of decarbonisation. Therefore, the main objective of this paper is to identify the drivers of voluntary corporate decarbonisation illustrated by climate target-setting practices. In particular, this paper aims at diagnosing whether European Union (EU)-wide and country-level policies foster material corporate commitment to mitigating the carbon footprint in two countries that are exceptionally heavily dependent on fossil fuels: Poland and Hungary, which are characterised by a specific political-economic situation. This analysis focuses on policies related to the EU sustainable finance initiative that enhances companies to voluntarily reduce their GHG emissions: (1) sustainable financial sector, (2) corporate disclosure, and (3) corporate governance policy. At the country level, the national policies for state-owned enterprises (SOEs) are analysed. The empirical research is conducted based on the financial and economic data for a group of Polish and Hungarian publicly listed companies exposed to these regulations. The exposure to certain policies is approximated through selected corporate characteristics. Logistic regression analysis is applied to firm-level data gathered from Refinitive and corporate reports. The dataset covers the period 2014 to 2021, with 214 data-points. The response variable is a binary indicator of whether a company sets emission targets. The empirical research proved that state ownership, belonging to the financial sector, and performance-oriented corporate governance factors have a significantly negative impact on the probability of a company setting target emissions. On the other hand, the company’s size and leverage have a strong positive impact on the probability of setting emission targets. Also, it was confirmed that after 2020 the frequency of corporate target-setting in Poland and Hungary increased. Additionally, it was observed that Polish firms are more willing to set climate targets than Hungarian ones. Therefore, from the analysed policies, only the corporate sustainability disclosure policy proved to have a positive impact on the practices of setting climate targets in Polish and Hungarian firms. The policies related to the sustainable financial sector and to state-owned enterprises proved to have a negative impact on the probability of setting climate targets, while for the corporate governance policy, the results are mixed. In this vein, it was shown that, by a majority, policies to stimulate voluntary corporate commitment to decarbonisation are counter-effective in countries characterised by exceptional fossil fuel dependence and particular institutional features. The original value of this study stems from the applied methodology focusing on a mix of policies addressing the deep decarbonisation process in the specific country settings. The presented research contributes to an on-going debate on the drivers of voluntary corporate decarbonisation, in particular the impact that policy mixes framed under the sustainable finance agenda may have on material commitments to GHG emission reduction targets. In this context, the main findings are important for policymakers who are responsible for creating and implementing policy measures devoted to the deep decarbonisation process. It is recommended that policymakers should consider national specificities while designing policies for a Europe-wide net-zero transition and account for potential tensions arising from different goals as they may have impact on the effectiveness of the decarbonisation process. Future research may focus on the verification of the observed relationships between variables on a larger sample of the European firms to identify the key drivers of deep corporate decarbonisation.

Role of corporate sustainability disclosures in moderating the impact of country-level uncertainties on tourism sector firms’ risk

The study investigates the role of corporate sustainability disclosures in moderating the link between country-level uncertainties (economic policy uncertainty, political uncertainty and uncertainty due to climate change) and firms’ risks (total risk, market risk, and default risk) in the worldwide tourism firms. We consider the volume of ESG (environmental, social and governance) activities disclosures by the firms as a proxy of corporate sustainability disclosures. The study also explores the link between sustainability disclosures and firms’ risks to validate the risk-reduction hypothesis. The study further highlights the relevance of country-level uncertainties in increasing firms’ risks. The findings indicate that corporate sustainability disclosures can assist in mitigating tourism firms’ risks during periods of heightened country-level uncertainties. The study also documents the significance of sustainability disclosures in reducing the effect of uncertainties on tourism firms’ risks during the COVID-19 period. The results validate the risk-reduction hypothesis indicating that firms’ engagement in corporate sustainability practices facilitates risk mitigation efforts during periods of escalated external uncertainties. By demonstrating that firms that engage in sustainability practices and provide required disclosures are better equipped to manage risks during periods of increased uncertainty, the study provides valuable insights for industry stakeholders, including investors, policymakers, and firms themselves.

From financial reporting to ESG reporting: a bibliometric analysis of the evolution in corporate sustainability disclosures

From financial reporting to ESG reporting: a bibliometric analysis of the evolution in corporate sustainability disclosures

A dataset on corporate sustainability disclosure

Enterprises, as key emitters, play a vital role in promoting sustainable development. Corporate sustainability disclosure provides a key channel for stakeholders to gain insights into a company’s sustainability progress. However, few studies have been conducted to measure sustainability disclosure at the firm level. In this study, we apply the machine learning techniques to listed companies’ management discussion and analysis (MD&A) documents and construct a dataset on corporate sustainability disclosure, including the Corporate Sustainability Disclosure Index (CSDI), CSDI_Economic Dimension (CSDI_ECO), CSDI_Environmental Dimension (CSDI_ENV), and CSDI_Social Dimension (CSDI_SOCI). The dataset will be updated annually. To the best of our knowledge, this is the first sustainability disclosure dataset constructed at the firm level. Our dataset reflects corporate managements’ sustainability attitudes and promotes the implementation of corporate sustainability strategies and subsequent sustainable economic and social outcomes.

Corporate sustainability disclosure on social media and its difference from sustainability reports:Evidence from the energy sector

The purpose of this study is to examine the sustainability information that energy companies provide on social media and the relationship between that data and that which is shared in conventional sustainability reports. Based on stakeholder theory, we use a sample of Chinese A-share listed energy corporations in 2020 and refer to GRI G4 guidelines to conduct content analysis on their 17,451 tweets from the WeChat platform and 53 sustainability reports. The analysis results show the following: 1) both the sustainability disclosures of Chinese energy firms on WeChat platform and sustainability reports focus on investor and employee dimensions. Among them, the average proportion of investor dimension disclosure to total disclosure is 31.92% and 35.19% on social media and sustainability reports, respectively, and the average proportion of employee dimension disclosure is 27.22% and 17.92%, respectively. However, the two channels show a large difference in the environment and government dimensions. The average proportion of environment disclosure in sustainability reports is 13.44%, while on social media it is only 2.01%. Government disclosure in sustainability reports is 8.24% and as high as 20.43% on social media. (2) Chinese energy firms prefer to provide supplementary information on social media. For example, using the investor dimension as an example, the average proportion of non-GRI information on social media is 71.47%, while that of the sustainability report is only 48.56%. This study helps stakeholders to better understand sustainable information on social media.

Pendidikan dan Pengalaman Kerja Dewan Direksi di Negara Maju terhadap Pengungkapan Keberlanjutan

The board of directors as a strategic decision maker can influence corporate sustainability disclosures. The purpose of this study was to determine the effect of the education and work experience of directors in developed countries on sustainability disclosure. The research sample consisted of 64 companies listed on the IDX for the 2017-2021 period. Multiple linear regression in STATA software is used to analyze the data. The results of the analysis prove that the education and work experience of boards of directors in developed countries have a positive effect on corporate sustainability disclosures in Indonesia. The Board of Directors has integrated values regarding sustainability into itself. The novelty of this study is to differentiate the samples based on their disclosure, comprehensive or core options. This research provides practical implications for companies to pay attention to the background of directors in order to realize better sustainability disclosures.
 Keywords: Director’s Education; Director’s Working Experience; Sustainability Disclosures; Upper-Echelon Theory

Understanding Corporate Sustainability Disclosures from the Securities Exchange Commission Filings

As sustainability becomes fundamental to companies, voluntary and mandatory disclosures or corporate sustainability practices have become a key source of information for various stakeholders, including regulatory bodies, environmental watchdogs, nonprofits and NGOs, investors, shareholders, and the public at large. Understanding sustainability practices by analyzing a large volume of disclosures poses major challenges, given that the information is mostly in the form of text. Applying machine learning and text analytic methods, we analyzed approximately 25,428 disclosure reports for the period of 2011 to 2020, extracted from the Securities and Exchange Commission (SEC) filings and made available at the Ceres website via application programming interfaces (APIs). Our study identified six industry clusters from the K-means and six main topics from the latent Dirichlet allocation (LDA) method that related to the disclosure of climate-change-related environmental concerns. Both methods produced overlapping results that further reinforce and enhance our understanding of climate-change-related disclosure at various levels, such as sector, industry, and topic. Our analysis shows that companies are concerned primarily with the topics of gas emission, carbon risk, climate change, loss and damage, renewable energy, and financial impact when disclosing climate-change-related issues to the government. The study has implications for corporate sustainability practices, the communication and dissemination of such practices to stakeholders at large and furthering our understanding of sustainability in general.

Ownership Structure and Corporate Sustainability Disclosure in Kenya: Interaction Effect of Board Gender Diversity

Most firms in this day and age seek to report issues affecting assorted stakeholders. Consequently, sustainability revelation endorses all-inclusive rather than economic performance analysis of the organization. The study sought after the interaction effect of board gender diversity in the relationship between ownership structure and corporate sustainability disclosure of listed companies in Kenya. The theoretical framework was made of legitimacy, triple bottom line and stakeholder theories. Guided by causal research design, 62 listed companies were targeted but 56 were included after inclusion and exclusion criteria. .  Secondary data obtained from audited annual reports for the year 2021 was analyzed using SPSS. From the multiple regression analysis, there was a negative but significant effect (β= -.246, .001<.05) of managerial ownership on corporate sustainability disclosure. On the contrary, both institutional and foreign ownership positively but insignificantly affect corporate sustainability disclosure as indicated by (β=.423, .816>.05) and (β=.356, .559>.05) respectively. Furthermore, board gender diversity positively and significantly moderates the relationship between managerial (β=.277, .001<.05) along with institutional ownership (β=.343, .000<.05) and corporate sustainability disclosure. To sum up, sustainability disclosure of the firm is vital for institutional and foreign more than managerial investors. From the findings, board gender diversity enriches sustainability disclosure once interacted with managerial and institutional ownership structure.  The management of the listed companies in Kenya are expected to uphold ownership structure by attracting investors, both individuals and institutions. More importantly, the companies are expected to formulate ways of promoting women representation in the board so as to progress the gender diversity concept.

Corporate Sustainability in Family Firms – a systematic literature review and research agenda

The literature on corporate sustainability in family firms has been inconsistent and heterogeneous. The aim of this systematic literature review was to build a conceptual framework that structures and guides corporate sustainability findings. A systematic literature search was performed in four databases using search terms related to various corporate sustainability concepts and yielded 1348 published papers on corporate sustainability. Based on rigorous selection criteria, 60 empirical articles are analyzed abductively (by deconstructing each study into corporate governance, signaling and stakeholder theory). The results show that family firms overperform non-family firms regarding corporate sustainability activities. Moreover, family influence in management strengthens corporate sustainability performance, which increases the firm’s value. Family firms also profit from corporate sustainability disclosure regarding economic and non-economic measures like reputation, corporate sustainability engagement fosters networks among stakeholders. This study structures the field of sustainability research in family business and provides a theoretical framework that guides practitioners and future research.

Corporate Characteristics and Sustainability Disclosure in Bangladesh: An Analytical Study Based on Global Reporting Initiative Guideline 4

Corporate Characteristics and Sustainability Disclosure in Bangladesh: An Analytical Study Based on Global Reporting Initiative Guideline 4

Moderating Role of Financial Performance on The Relationship Between Board Attributes and Corporate Sustainability Disclosure Compliance

The concept of financial performance is of great concern to stakeholders. This empirical paper investigates the moderating role of financial performance on the link between board attributes and corporate sustainability disclosure compliance (CSDC). The going concern of a company depends on its ability to generate returns from operating, investing, and financing activities. Thus, it is crucially important to explore the extent to which a firm's financial performance strengthens the influence of firm-level determinants of CSDC. The sample for the current study consists of 118 Nigerian-listed companies over seven years between 2011 and 2017. The dynamic GMM regression analysis is used for data analysis. The GMM results reveal the moderating effect of return on assets and return on equity on the influence of firm and board attributes on CSDC, evident from significant positive interaction with board size, board independence, gender diversity and audit committee. This implies that when firms gain financial strength to engage in more sustainable activities, this increases the level of corporate sustainability disclosure compliance.

Concept of Education for Corporate Sustainability Disclosures – An Emerging Need

Purpose: The purpose of this paper is to broaden the concept of Education for Corporate Sustainability Disclosures and describe its meaning and significance in the present-day Higher Education. The paper studies the literatures published by the researchers in the related areas and arrives at the conceptualisation of a new sub area for future research. It is an emerging need for the future management and accounting professionals, to imbibe the corporate sustainability disclosure aspects as Sustainability Disclosures by Corporates are being mandated in several nations across the globe. Methodology: This paper studies the existing literature to propose a new concept submerging the concept of Education for Sustainable Development (ESD) And Corporate Sustainability Disclosures (CSD). Using the Keyword and Boolean search method in Google Scholar the related articles published in various journals is considered for the study. Findings: Education for CSD is becoming the need of the hour, as it is being highlighted in past several research. ‘Corporate Sustainability Disclosures’ is broader in scope and dimension as compared Sustainability accounting and hence can be adapted to a wider stream of courses rather than professional accounting alone. Originality/ Value: This paper tries to throw light on the Education for Corporate Sustainability Disclosures by the Higher Educational Institutions, with special focus to the Management, Commerce and Accounting streams of study.

Institutional Investor ESG Engagement: The European Experience

Awareness of the systemic challenges posed by environmental and social issues has driven regulatory action undertaken at the EU level more strongly by far than in any other jurisdiction. Some pieces of regulation adopted under the umbrella of the so-called European Green Deal rely on institutional investors to drive a shift towards sustainable finance. But in spite of the growing practical relevance of active share ownership, including in its environmental and social dimensions, whether institutions are motivated, and are actually able, to effectively play such crucial a role remains controversial. Even assuming they were committed to not just cosmetically address environmental and social issues, still there are limitations to the reasonable reach of investor action in face of the scale of the challenges at stake. Limitations not only derive from the deficient incentives structure and the collective action issues that are typical of asset managers. They also depend on factors not in control of the asset manager, such as varying end-investor preferences and availability of better ESG data and information. The problem of divergent, and opaque, ESG ratings and indices couples with that of non-consistent frameworks for corporate sustainability disclosures, and the underlying differing concepts of materiality, making it hard for investors to resort to reliable yet essential information they need to properly perform sustainability assessments. Some skepticism concerning institutions’ disposition to sustainability seems to be justified also where evidence referring to their actual voting behavior at investee firms is considered.

Corporate sustainability disclosure and media visibility: Mixed method evidence from the tourism sector

The purpose of this investigation is to analyse the relationship between corporate sustainability disclosure and media visibility, as well as the relative impact of each of these investments on perceived quality and electronic popularity in the tourism sector. Therefore, we have identified organizations in the Sustainability Disclosure Database from the Global Reporting Initiative, active in the tourism sector, as well as organizations with hotel properties rated as 2019 Star Award Winners by Forbes Travel Guide, located in one of the twenty most visited cities in the world in 2018. The results show that organizations choose to invest in sustainability disclosure on the expectation of securing an improvement in their media visibility. When they choose to invest in media visibility, organizations do not feel the strategic need to invest in sustainability disclosure. For companies with a higher perceived quality level, investing in sustainability disclosure is not a causal condition. For companies with a higher perceived electronic popularity, the majority continue to invest in media visibility, except public companies that invest in sustainability disclosure instead.