Non-financial Sustainability Research Articles

A fenntarthatósági jelentéstétel gyakorlatának vizsgálata

The responsibility of companies to reduce the negative effects of climate change is obvious. The transition from a traditional linear economy to a circular economy means an increasing burden on companies. Besides the adequate financial performance, more and more emphasis is being placed on environmental performance. This study examines the non-financial sustainability reporting practices of 20 companies listed on the Bucharest Stock Exchange. The analysis used non-financial reports of companies with the highest market capitalization between 2020 and 2022. The analysis results support that the reports of environmentally sensitive companies are more extensive and detailed concerning investigated aspects. The details and length of the companies’ ESG (Environment, Social, Governance) reports increased during the three years examined. The environmental and social aspects of disclosed documents are more detailed for the banks, the oil extraction, and the telecommunication companies. In the company sample examined, it can be observed that most of the reports are prepared according to the GRI regulation. It can also be observed that the companies examined made more detailed and longer reports. The research results also support the fact that the aspects of the ESG report (E, S, G) also depend on the sector in which the companies operate.

Non-financial sustainability reporting and firm reputation. Evidence from Chinese listed companies

PurposeThis study highlights the influence of non-financial sustainability reporting and firm reputation (FR) on the China Stock Exchange. The study is based on the components of sustainability reporting that influence FR.Design/methodology/approachA simple ordinary least squares (OLS) regression model is initially run to test the hypotheses. Advanced econometric methods are used to detect the presence of heteroskedasticity. The study utilizes fixed-effect, two-stage least squares (2SLS) and two-step generalized method of moments (GMM) regression models to address endogeneity issues.FindingsFindings suggest that NFSR has a negative influence on FR. Conversely, environmental, social and governance (ESG) sustainability reporting exhibited positive associations with a FR in fixed-effect, 2SLS and GMM results.Research limitations/implicationsThis study has limitations, and data collection is restricted to the period from January 2018 to June 2023, limiting the scope of findings due to data constraints. Brand equity measurement is considered only one aspect of a company's activities, and other methods can also be considered for measuring brand equity. Another limitation is a standardized method for measuring NFSR. While this study used the Arianpoor and Salehi (2021) model to measure sustainability reporting in the Chinese market, future research could explore different methods.Practical implicationsThe findings of this study have important practical implications for corporate management, highlighting reputation challenges and the strategic importance of sustainability. Managers are encouraged to use NFSR strategically to enhance their reputation and corporate strategy.Social implicationsThe social implications highlight ownership and regulatory structures, promoting enhanced sustainability reporting in China's business culture. This insight informs policymakers, businesses and stakeholders regarding the importance of sustainability reporting, guiding decisions on corporate reputation and sustainability regulations.Originality/valueThe research indicates the importance of context-specific sustainability reporting for enhancing reputation. It provides insights into sustainability's impact on a company's reputation, promoting responsible practices for a sustainable global economy. To the best of the authors' knowledge, this is the first research that utilizes the NFSR frameworks and a sample of firms in China to discuss sustainability reporting with different guidelines.

Analysis of the Links Between ESG Performance and Liquidity Rates for the Companies Listed on the Emerging Markets in the European Union

Abstract Nowdays investors and other stakeholders increasingly consider ESG factors when making investment decisions. They were supported by numerous rating agencies that developed a large number of indices and reporting standards to facilitate the choice of the most sustainable companies from an ESG perspective. When the relationship between financial performance and sustainability was analyzed, the researchers did not reach an unanimously accepted conclusion: many studies show a positive relationship, while others show a negative one. In many studies, the relationship between ESG performance and financial performance, assessed through profitability rates was privileged. The aim of this study is to investigate if there is a relationship between ESG performance and the liquidity rates of the listed companies from emerging financial markets in European Union. The emerging markets in European Union were selected due to their attractiveness, as they offer high earning possibilities to investors. At the same time, aspects regarding the mandatory of non-financial sustainability reporting, starting from 2023, were taken into account. This will increase the comparability and homogeneity of ESG scores, but will also generate additional reporting costs, putting suplimentary pressure on companies.

Sustainability of Cooperatives in One City in Negros Occidental

This study aims to determine Sustainability level of cooperatives in Cadiz City, in terms of its non-financial and financial components. This study is a quantitative and qualitative design of descriptive research. Instruments used were the Cooperative Performance Report Questionnaire and interview questions which were conducted through Focused Group Discussion (FGD) and/or face to face interview. Results revealed that Sustainability of cooperatives in terms of non-financial components when taken as a whole is great. Extent of cooperatives’ sustainability in terms of financial components when taken as a whole is Moderate. No significant relationship between the cooperatives’ non-financial sustainability and financial sustainability when they are taken as a whole and when grouped according to type. No significant difference on extent of cooperative sustainability when assessed in terms of their non-financial components and grouped according to different types of cooperative. No significant difference on extent of cooperatives’ sustainability when assessed in terms of their financial components and grouped according to different types of cooperative. The researcher concluded that cooperatives’ sustainability are much affected by its non-financial components in terms of Human Resource Management, Structure and Social Aspects. In terms of its financial aspects, Institutional Strengths and profitability performance of cooperatives hinder its sustainability.

THE ENVIRONMENTAL AND FINANCIAL PERFORMANCES ON THE ENERGY SECTOR. CASE STUDY IN NORTH AMERICA

Nowadays, the population is becoming more and more environmentally conscious compared to previous years. Governments are under pressure to adopt sustainable legislation in light of the increased public acknowledgement of environmental issues, and consumers are urged to make purchases that have a lower environmental impact. Due to this phenomenon, the competition becomes significantly challenging. Companies must therefore adopt sustainable strategies in order to achieve sustainable growth. The research examines how environmental factors affect the financial success of the energy industry since the viability of the energy sector has drawn criticism. The objective of the current study aims to emphasize the relationship between non-financial sustainability, as determined by the environmental performance score, and the financial performance as represented by total revenues in the aforementioned sector. The dataset is obtained from Thomson Reuters Eikon and consists of 100 publicly traded companies in North America over a five-year period. It is processed using multiple linear regression and bivariate correlation techniques. The analysis findings indicate that the environmental score has a conflicting influence on the financial performance of the companies.

THE IMPACT OF SUSTAINABILITY REPORTING PRACTICES ON EARNINGS MANAGEMENT IN LISTED COMPANIES IN SRI LANKA: PRE & DURING THE COVID-19 SITUATION

This study aimed to evaluate the impact of sustainability reporting practices (SRP) on the Earnings Management (E.M.) of companies that are listed on the Colombo Stock Exchange (CSE) in pre and during the Covid-19 situation under the best sustainability ratings 2021. The population under consideration in this research is the total number of companies selected for the best sustainability ratings in 2021. The study population comprised 66 companies, including financial and non-financial companies listed under the Colombo Stock exchange. The random sampling method is used for selecting the study sample. The sample comprises 45 non-financial companies in Sri Lanka that reported SRP disclosure information for six years during 2016-2021. This research used secondary data from the financial, annual, and sustainability reports issued by the companies. The independent variable is SRP, which consists of economic, environmental, and social indicators. The disclosure index of Sustainability reporting guidelines from GRI G4 and finally developed the sustainability reporting disclosure index (SRDI) use for him. The dependent variable is E.M., measured by discretionary accruals calculated using the Modified Jones Model. Descriptive statistics and panel regression analyses were used to analyse the information in the reports to recognise the impact of SPRs on E.M. Research results suggest that there is a significant negative impact of SRPs on E.M. practices in pre and during the Covid-19 period. Indeed, research evidence shows that companies with higher SRPs are less prone to advance E.M. practices. This study’s findings indicate that all stakeholders can use earnings management practices and sustainability reporting disclosures as sources of information when making decisions. The outcomes of this research show that non-financial sustainability reporting information disclosures are linked with the financial details published by the firm, specifically in earnings management. The study’s other implication is the importance of developing businesses for sustainability reporting disclosure and giving an assurance service for that purpose.

Nonfinancial sustainability reporting, management legitimate authority and enterprise value

PurposeThe purpose of this study is to assess the impact of nonfinancial sustainability reporting (NFSR) on enterprise value moderated by the management legitimate authority (MLA) for companies listed on the Tehran Stock Exchange.Design/methodology/approachTo this aim, 190 firms were assessed during 2014–2019. This study used Arianpoor and Salehi’s indicators. The scoring method for NFSR, environmental sustainability reporting (ESR), social sustainability reporting (SSR) and governance sustainability reporting (GSR) was based on Zimon et al. Also, the CEO pay slice index was used to calculate the management’s legitimate authority. Tobin’s Q was used as a standard measure for the firm value, providing a suitable means of comparison.FindingsThe results revealed that NFSR affects enterprise value positively. In addition, ESR and SSR positively affect the enterprise value. However, GSR did not affect the enterprise value. MLA affects the relationship between NFSR/ESR/SSR/GSR and enterprise value, resulting from the effect of MLA on firm-related information quality and transparency.Practical implicationsLinking NFSR and management’s legitimate authority to firm value will enable managers to lead in helping firms enhance transparency and disclosure, improving their reporting standards and increasing the enterprise value. This, in turn, will ultimately result in better sustainability and governance practices.Social implicationsThe results can help understand that analysts and investors somehow consider discussions related to the NFSR in decisions related to the company’s value, and positive market reactions to these practices’ disclosures can motivate firms to improve value and performance.Originality/valueThe majority of prior research in this field has focused on developing countries. An international perspective is critical, and this study helps draw a more contextualized picture of sustainability than before. In addition, the present research explored the management’s legitimate authority role, which is considered an innovative aspect.

The relationship between ESG and firm value. Case study of the automotive industry

The automotive industry is set to face a series of fundamental changes in the following years. Along with the transition to electric vehicles or production of autonomous cars, companies are also expected to better address sustainability issues, usually divided into environmental, social and governance (ESG) aspects. The present paper aims to explore the relationship between non-financial sustainability, measured by ESG scores, and firm value in the automotive industry, where empirical evidence is scarce. A structural equation modelling (SEM) approach has been taken on a novel dataset of 131 listed companies worldwide across 6 years. Our results indicate a mixed influence of the E, S, G scores on firm value in the analyzed period, with some inconclusive effects, especially from the social score. The findings are beneficial for investors, fund managers and automotive companies’ executives. Further research directions are also provided.

A Futuristic View of Using XBRL Technology in Non-Financial Sustainability Reporting: The Case of the FDIC

The rapid use and development of information and communication technology capabilities in the public sector has revolutionized the mechanism that government agencies use to collect, process, and disseminate data. Electronic government is one of the strategic initiatives that many government agencies have considered adopting to offer efficient web-based services and operations. Although there have been efforts to examine the implementation process of technological innovations in financial and business reporting, many government agencies are about to face a bigger challenge in developing or adopting current technologies to assess their usefulness for non-financial sustainability reporting. The Extensible Business Reporting Language, XBRL, has been adopted by the U.S. Federal Deposit Insurance Corporation (FDIC) to process financial data in the quarterly call reports filed by banks. Using Rogers’ well-established theory of innovation adoption process, this paper discusses the FDIC’s XBRL implementation process and investigates the roles and experiences of the agency’s stakeholders. A case study research methodology, supported by semi-structured interviews, is used to explore each phase of the implementation process. The findings reveal that the process was facilitated by stakeholder engagement, technical support, and the agency’s strategic decision-making process. This paper contributes to the literature by examining the applications, benefits, and challenges of using XBRL technology to process non-financial sustainability data, which is still an under-researched area. Therefore, the implications for using the technology in non-financial reporting will be insightful for future regulatory adopters and their stakeholders including filer banks, software vendors, and various users of financial and non-financial information.

Selection of non-financial sustainability indicators as key elements for multi-criteria analysis of hotel chains

Nowadays, online information provided by corporate websites has a great impact on the hotel industry performance. According to existing studies, it is very likely that customers' and investors' decisions may change after consulting these portals. The environmental commitment of hotel companies is usually demonstrated to stakeholders by obtaining environmental quality certifications and eco-labels issued by specialised entities in compliance with certain requirements. However, the question of how to use the sustainable indicators that are usually scattered on the web or in company reports is a problem that requires further research. The main objective of this study is to develop a robust and reliable model to assess the sustainability of hotel chains based on the information gathered from their websites and corporate reports. A literature review is carried out and specialists are consulted to determine the critical factors that affect hotel sustainability. Once the criteria based on non-financial indicators have been chosen, they are organised in a hierarchy according to their orientation. To achieve the objective of the study, a hybrid model is proposed that includes two multi-criteria decision-making approaches, namely the Analytic Hierarchy Process (AHP) and the Technique for Order Preference by Similarity to Ideal Solution (TOPSIS) method. AHP is used to weight the criteria, and the ranking of the alternatives is provided through TOPSIS. Subsequently, a sensitivity analysis is performed to determine the critical indicators. Finally, a numerical example is carried out with a case study of the largest Spanish hotel chains to illustrate the function and applicability of the proposed method. With the results obtained, it has been possible to establish a ranking or selection of hotel chains for the case study, since the hybrid AHP-TOPSIS method provides reliable and robust results for any qualitative or quantitative evaluation criterion, which is of great interest for the different actors involved.

Retail Firm Social Compliance Integration as a Precondition for Supply Chain Effectiveness

Global supply chains research has shown that advanced economy retail firms using codes of conduct to enforce suppliers’ compliance with labor standards has had limited effects on working conditions in developing economies. However, it is not known whether the management and organizational context within the retail firm itself may be responsible for their ineffective social compliance enforcement. In fact, recent evidence suggests that retailers’ social compliance enforcement may be undermined by conflicting demands originating from siloed functions within the retail firm. We adopt a management and organizations perspective to describe social compliance integration among supplier-facing functional units within the retail firm as a prerequisite for effective social compliance enforcement and subsequently for supply chain effectiveness and social responsibility. We develop a theoretical framework that defines the cross-functional components of social compliance integration and its organizational determinants, and explains how it creates more effective and responsible supply chains. Our work uncovers necessary organizational conditions for the effectiveness and sustainability of global supply chains, emphasizes the importance of cross-functional coordination in the management of an organization’s business ecosystem, and explains how socially conscious organizations can minimize decoupling of non-financial sustainability goals.

Sustainability Reporting and Corporate Reputation: The Moderating Effect of CEO Opportunistic Behavior

The present study’s main objective is to assess the impact of non-financial sustainability reporting (NFSR) on corporate reputation and the role of the CEO in the opportunistic behavior of companies listed on the Tehran Stock Exchange. In total, 178 firms were assessed for this paper during 2013–2020. In this study for calculating the NFSR, environmental sustainability reporting (ESR), social sustainability reporting (SSR), governance sustainability reporting (GSR) and ethical sustainability reporting (ETSR), Arianpoor and Salehi’s comprehensive and conceptual model has been used. In addition, the literature states that a CEO’s power can be classified as an opportunity for discretion and opportunistic behavior in CEOs that is in contrast with stakeholder demands. To this end, in this study, CEOs’ power has been used as an indicator for the CEO’s opportunistic behavior, and the CEO pay slice (CPS) index was used to calculate the CEO’s level of power. The results revealed that NFSR affects corporate reputation positively. In addition, ESR, SSR, ETSR and GSR positively affect corporate reputation. Moreover, the CEO’s power affects the relationship between NFSR/ESR/SSR/ETSR and corporate reputation. Because managers desire to engage in social and ethical activities, they try to hide the company’s errors and increase its reputation. The results revealed that the CEO’s power did not affect the relationship between GSR and corporate reputation. Since companies in the Tehran Stock Exchange are under intensive supervision, such as in governance, the impact of a CEO’s power and the interaction of a CEO’s power and GSR on company reputation in this study might, thus, not apply to these companies. It is crucial to investigate NFSR, corporate reputation and CEO power within Iran-specific conditions because of differences in emerging markets and developing countries such as Iran, which have diverse ownership structures, economic status, legal systems, government policies, and culture.

Company Purpose in the Context of Business Sustainability and Insolvency Proceedings

The organizational and operational company purposes of the debtor company terminate in liquidation proceedings. In addition, the nonfinancial sustainability elements vanish in a piecemeal selling. Through a selling as a going concern, the operational company purpose and sustainability elements may be transferred to a byer company. In restructuring proceedings, both the organizational and operational company purposes remain, but the shareholder primacy shifts to a creditor priority. When choosing between liquidation and restructuring proceedings, there are two tests: the viability test and the best-interests-of-creditors test. In these tests, all obligatory non-financial sustainability elements, such as environmental requirements laid down in the law, must be considered. Voluntary non-financial sustainability investments for implementing the company operational purpose are allowed also during the restructuring plan if they benefit the creditors.

Materiality of Disclosure of Non-financial Sustainability Information and Company Financial Performance: Evidence from Australian Listed Companies

The broad objective of this paper is to investigate the relationships between the disclosure of non-financial material sustainability information and the financial performance of listed Australian companies in the materials sector. Using firm-level fixed-effects analysis for all companies, the findings show a mixed relationship (no relationship or statistically significant negative relationship) between lagged aggregate non-financial material sustainability disclosure and financial performance of Australian listed companies in the materials sector. The present study contributes to the existing literature on disclosure of non-financial sustainability information by adding insights into the materiality concept of non-financial sustainability disclosure in the Australian context. The evidence from the current study is expected to provide useful information for the companies’ stakeholders in Australia who use both financial and non-financial information for formulating business and regulatory policies and for decisions regarding the persistent expansion of sustainability reporting requirements.
 
 Funding Acknowledgement: This study is funded by the “Australian Government Research Training Program (RTP) Scholarship”.

Sustainable reporting practices of selected cement companies in

Sustainability reporting, under organizational reporting framework, gives information about economic, environmental, social, and governance performance (GRI). Corporate sustainability reporting has a strong practice of environmental reporting with corporate principles. Despite various guidelines such as GRI, the reporting and presentation of sustainable items are not common in practice. The study aims to analyze the current sustainability of Accounting Practices in Indian Cement Companies. To analyze the same, researchers have taken a case study of five prominent cement companies, JK Cement Ltd., Shree Cement Ltd., ACC Cement Ltd., Binani Cement Ltd., and Ambuja Cement. The study observed the common reporting methods of the selected companies under various common heads in the Indian Cement companies and later to make a comparison amongst them, further by taking the views of the company respondents, with a questionnaire. For measuring combined effect of the selected companies, financial and non-financial disclosure of the selected 13 items for sustainable reporting has been considered, and to analyze the independent variables having influenced upon the combined effect of dependent variables MANOVA statistical technique was applied. It was found that there is a critical difference in the reporting of financial and non-financial sustainability factors by Indian cement companies. The study concluded that the corporations should follow the best standards of environmental sustainability for strengthening their activities and documentation on sustainable growth.

The relationship among financial and non-financial aspects of business sustainability performance: evidence from Iranian panel data

PurposeThe study's main objective is to identify business sustainability performance indicators and analyze the mutual relationship between different business sustainability components in Iran.Design/methodology/approachTo achieve research objectives, the 125 indicators of Business Sustainability Performance in Arianpoor and Salehi (2020) were used. For data collection, a questionnaire is designed and developed. Moreover, the Delphi method is used to determine the indicators related to business sustainability performance. Accordingly, we attempted to send the questionnaire to 346 experts and qualified opinion-leaders in the study area to utilize their opinions in our project. Finally, 108 questionnaires were analyzed statistically.FindingsIn this study, the confirmatory factor analysis (CFA), binomial test, one sample t-test, one sample Kolmogorov–Smirnov test and Kruskal–Wallis test are used. The results of statistical tests show that among 125 proposed indicators, 11 indicators were eliminated. Hence, to assess business sustainability performance in the listed firm on the Tehran Stock Exchange, 114 indicators were analyzed. To achieve the study's objective, the relationship between financial and non-financial sustainability performance and their effect is analyzed using the Smart PLS Software. Findings indicate that there is a mutual relationship between financial and non-financial sustainability performance in Iran. There is also a relationship between the operational component and research component and non-financial sustainability performance. In contrast, as for the growth component and non-financial sustainability performance, there is no significant relationship. Also, root means squared error (RMSE) values suggest a reasonable model-data fit.Originality/valueThe type and characteristics of different regions have a significant role in the reporting and differ according to different economic conditions. The discussion of business sustainability and its reporting is important; therefore, essential indicators were identified in this study. In addition, all aspects of sustainability performance are considered cohesively to analyze the mutual relationship between different components of sustainability performance and to be able to make more appropriate decisions in future studies about performance evaluation and reporting using the results of this paper.

Business Sustainability and Insolvency Proceedings—The EU Perspective

Business sustainability refers to economic sustainability performance that promotes profitability and to non-financial sustainability that may or may not create profitability. This paper concentrates on the relation between business sustainability and insolvency proceedings by asking what role business sustainability plays when choosing between restructuring (rescue) and liquidation proceedings. This choice is based on two tests: a viability test and a best interest of creditors test, the latter meaning that no dissenting creditor should be worse off in restructuring than in liquidation proceedings. In addition, the paper asks what role business sustainability plays when making the choice between restructuring and liquidation and what the consequences of this choice are for business sustainability elements. In addition, the paper asks who the stakeholders for business sustainability are in insolvency situations. The finding of the study is that creditor interest should be better balanced with non-financial sustainability, but with the requirement that creditors know the risks beforehand and are able to protect their interests, for example, through securities. Regarding environmental hazards, the paper suggests a “super responsibility” of bankruptcy estates to handle environmental problems, according to the precedent of the Canadian Supreme Court.

A review of biodiversity reporting by the South African seafood industry

Background: Biodiversity reporting is an area of sustainability accounting research that has received comparatively little attention from the academic community. This is despite the growing scientific concern about climate change, habitat destruction and extinction of species and mounting evidence on the implications of these environmental issues for our current way of life. This necessitates additional research on biodiversity reporting, especially in a South African context given that the country is home to some of the richest biodiversity regions on earth. Aim: This research examines what information companies in the South African seafood industry are reporting on biodiversity. This includes the development and application of an easy-to-use disclosure scorecard to track the quality of biodiversity-related disclosures. Setting: The study focuses on South African biodiversity reporting. The choice of region is informed by the country’s significant marine resources and mature corporate reporting environment, where non-financial disclosures are expected to be well developed. Methods: Content analysis was used to collect data from a sample of companies’ integrated and sustainability reports. The data were analysed interpretively to determine what biodiversity disclosures companies provide and the quality of those disclosures. Conclusion: The study shows that while the quantum of biodiversity reporting is relatively low, some companies are starting to provide more detailed accounts of their biodiversity impact, pointing to higher levels of reporting quality. There is still room for improvement, but these findings suggest that reporting on non-financial sustainability issues is maturing and that companies are beginning to appreciate the importance of preserving biodiversity for ensuring long-term sustainability.

Comparison of Sustainable Environmental, Social, and Corporate Governance Value Added Models for Investors Decision Making

The Sustainable Value-Added Model is a new approach in value-oriented strategic management that focuses on maximizing the value that is created by non-financial sustainability indicators. The objective of this paper is to refine the calculation of sustainable added value by incorporating environmental, social, and corporate governance sustainability indicators, assigning weights to the indicators and, by alternative methods, assigning target values to the indicators. Ten alternative models of Sustainable Environmental, Social, and Corporate Governance Value Added were created. The models encompass 11 environmental, social, and corporate governance indicators of sustainability, and two economic indicators (Earnings before Interest, Taxes, Depreciation and Amortization, and Value Added). Indicator values are related to the target values that represent the opportunity costs. The quality of the models was assessed by statistical methods, i.e., the Receiver Operating Characteristic curve, Gini index, and Kolmogorov-Smirnov statistic. The results of these statistics show sufficient quality of all the models proposed. The most accurate model is that with the economic indicator Value Added and target values that are based on the values of the company with the best economic results.

Supply Chain Management and Business Sustainability Synergy: A Theoretical and Integrated Perspective

Global business organizations face the challenges of adapting proper sustainability strategies and practices to effectively respond to social, ethical, environmental, and governance issues while improving financial performance in creating value for their shareholders. Business sustainability enables the integration of financial economic sustainability performance and non-financial environmental, social, ethical, and governance sustainability performance dimensions into the corporate culture, supply chain management and business models in creating shared value for all stakeholders. Business literature has provided mixed evidence of the tension, and possible link, between financial and non-financial sustainability performance dimensions and sustainability theories have yet to sufficiently address this tension. This paper attempts to fill this void by shedding light on the link between various dimensions of sustainability performance, their integrated effect on creating shared value for all stakeholders and their implications for supply chain sustainability. This paper examines the synergy between business sustainability and supply chain management by presenting a framework consisting of sustainability theories, sustainability performance dimensions, sustainability shared value concept, and sustainability best practices. Companies can use the suggested framework in integrating both financial and non-financial sustainability initiatives into their supply chain sustainability from production design, purchasing and inbound logistics, and manufacturing process to distribution and outbound logistics.