Sustainability Disclosure Research Articles

Unveiling The Impact of Green Accounting and Sustainability Disclosure On The Firm Value

This study examined the impact of green accounting and sustainability disclosure on firm value in the Indonesian palm oil industry. The objective was to empirically assess how environmental performance measured by PROPER and sustainability reports affects firm value. Using quantitative research methods, the study analyzed data from 124 palm oil company observations listed on the Indonesia Stock Exchange from 2018 to 2022. The research variables included firm value proxied by Tobin’s Q, green accounting proxied by PROPER scores, and sustainability disclosure indexed from the companies’ sustainability reports. The study also included profitability, firm size, and leverage as control variables. The results indicated that green accounting had a negative impact on firm value, suggesting that environmental compliance imposes short-term financial burdens on companies. However, sustainability disclosure did not significantly influence firm value, indicating that investors in the palm oil industry may prioritize short-term financial performance over long-term sustainability considerations. These findings contribute to the literature on corporate governance and sustainability, particularly in industries with high environmental impact, like palm oil.

Unveiling the drivers of green loan disclosures: a study of financial and governance determinants

Purpose This study aims to investigate the factors influencing Indian banks’ choice of green loan disclosure practices. The study analyzes the effect of financial and governance variables to understand the sustainable reporting (through green lending) behavior of Indian banks. Design/methodology/approach The data on green loan disclosure has been hand-collected from the annual reports using a content analysis approach. Using the data of 26 banks for 12 years (2012–2023), the study uses the panel regression method to control for cross-sectional heterogeneity and generalized methods of the moment to address potential endogeneity issues. Findings The empirical results depict that larger banks with sufficient risk capital and a strong corporate governance framework demonstrate greater disclosure of green loans. However, growth opportunities and higher market value impedes the reporting of green lending. Research limitations/implications The findings of the study will enhance the extant literature on sustainability disclosure by integrating the financial sector companies in the context of an emerging economy. However, future research may include nonbanking finance companies as well. Social implications Banks use societal deposits to invest in productive avenues, and therefore, it is paramount to understand their social and environmental consciousness while evaluating a financing proposal. This research provides a thorough understanding of the sustainable reporting of banks through the lens of green lending. Originality/value This research provides unique evidence on the bank-specific determinants of green loan disclosure in an emerging economy context as against the extant literature which primarily focused on sustainable reporting of nonfinancial companies.

Identifying Financially Material Content in Corporate Social Responsibility Reports

ABSTRACTThis study examines the relationship between financially material content in corporate social responsibility (CSR) reports and the decision usefulness of these reports. Utilizing sustainability disclosure standards and a machine learning topic modeling algorithm, a firm‐specific quantitative measure of financially material content in CSR reports is developed. It is hypothesized that firms providing greater amounts of financially material CSR content enhance their information environment, which enables analysts to make more accurate earnings predictions. The findings confirm a positive relationship between the extent of financially material CSR content disclosed and analyst forecast accuracy. This research demonstrates the effectiveness of using machine learning to identify financially material content within unstructured voluntary disclosures and contributes to the literature on the financial materiality of CSR activities and their related disclosures.

Do gender diversity and foreign investor affect sustainability disclosure

AbstractWe examine the effect of female board members and foreign institutional investors on corporate social responsibility (sustainability) disclosure in Indonesian listed firms from 2015 to 2017. Our final sample comprised 1192 firm‐year observations. We apply ordinary least squares pool regression to estimate the associations and address the endogeneity problem using the two‐stage least squares model, generalized method of moments, and lagged variables. While previous studies have focused on the impact of female board members and foreign institutional investors on financial outcomes, we extend the literature by investigating the association between both female board members and foreign investors and sustainable disclosure in Indonesia, where the participation of women is nominal, especially at the top management level, and the level of foreign ownership is high. Our findings propose a proportion of women as board members for listed firms and promote attractive policies to increase the number of foreign investors investing in Indonesia. It also contributes to conflicting results regarding the relationship between corporate governance and corporate social responsibility (CSR) commitment. Our results were robust after testing for endogeneity and adding more control variables. Overall, the findings have practical implications for policymakers and investors regarding corporate disclosure and governance in Indonesia.

The impact of corporate environmental reporting on the financial performance of listed manufacturing firms in Ghana (Csr‐24‐2036)

AbstractA growing number of businesses are facing criticism for engaging in environmentally damaging practices. Despite advancements in technology and operational efficiency, the environmental challenges confronting businesses have become increasingly urgent. As disclosure requirements have expanded, the importance of reporting standards for environmental sustainability has risen. This study explores the impact of corporate environmental reporting on the financial performance of listed manufacturing firms in Ghana. It analyses 10 years (2012–2021) of annual reports from 20 publicly traded manufacturing companies, using panel regression and content analysis to assess the data. The findings reveal that environmental sustainability disclosure has a positive and significant effect on return on equity (ROE) and net profit margin. Furthermore, disclosures related to health, safety, and community development initiatives have a strong positive impact on ROE. The study recommends that policymakers develop guidelines, especially for environmental reporting, to aid firms in preparing their annual reports. It also suggests that corporate accountants expand their expertise and collaborate with environmental and ecological experts. This research offers valuable insights for policymakers and provides a foundation for further investigation into the effects of corporate environmental reporting on the performance of listed firms in sub‐Saharan Africa.

Green financing and sustainability reporting among SMEs: The role of pro-environmental behavior and digitization

Despite the iconic contribution of SMEs to national and international development, it is widely recognized that they could threaten the circular economy due to their inadequate resources. In light of this, the paper put forward the resource-based view theory in order to comprehend the motivations behind SMEs' engagement in environmentally-friendly activities and, consequently, to get to the bottom of their sustainability disclosure. To this end, the study examined the effect of green financing on sustainability reporting phenomenon. Secondly, the mediation effect of pro-environmental behavior in the relationship between green financing and sustainability reporting was assessed. Finally, the research determined the moderation effect of digitization in the relationship between pro-environmental behavior and sustainability reporting. Data from 352 SMEs from Ghana were collected between May and June 2024, by employing the structured questionnaire. The data was analyzed through Structural Equation Modeling, performed with Amos (v.23). The study found the effect of green financing on sustainability reporting to be positive and significant. Pro-environmental behavior was revealed to partially mediate the relationship between green financing and sustainability reporting. The relationship between pro-environmental behavior and sustainability reporting was also found to be positively moderated by digitization. The study's findings facilitate the integration of digitization in SMEs' operations, and could be used to foster the promotion of green financing policies among SMEs, governments, and non-governmental agencies. The outcomes of the study aim at guiding and stimulating further studies on the promising relationship between digitization and sustainability reporting in the context of SMEs in emerging economies. Future studies are encouraged to investigate how business activities are influenced by specific green financing policies such as green bond since the present research considered the general perspective of green financing.

Environmental Sustainability Disclosure and Market Performance of Listed Consumer Goods Firms in Nigeria

This study aimed to examine the effect of environmental sustainability disclosure on the market performance of listed consumer goods firms in Nigeria. This study utilized ex-post facto research design. Data were gathered from the annual reports, sustainability disclosures, and financial databases of Nigerian consumer goods manufacturing firms listed on the Nigerian Exchange Group (NGX) as of December 31, 2023. The study encompassed a population of 21 listed consumer goods manufacturing firms in Nigeria. A census sampling technique was adopted, to investigate the entire population. The research covered a twelve-year period, from 2012 to 2023, to observe trends, patterns, and long-term impacts, enabling a robust analysis. This study employed descriptive statistics (mean, median, variance, standard deviation, skewness, and kurtosis) and inferential statistics (panel regression analysis, correlational analysis etc.) to conduct data analysis. This regression analysis conducted revealed that both environmental protections cost disclosure, and environmental research and development cost disclosure had positive and significant effect on the market performance of listed consumer goods firms in Nigeria. While environmental pollution cost disclosure had a negative but significant effect on market performance. Whereas environmental waste management control cost disclosure had positive and insignificant effect on market performance. The findings indicate that environmental cost disclosures play a significant role in shaping the market performance of consumer goods firms in Nigeria. Specifically, disclosures related to environmental protection and R&D have a positive impact, as they reflect a firm’s commitment to sustainability and innovation. It was recommended that firms should prioritize and continue to disclose their investments in environmental protection and R&D, as these are positively viewed by investors and enhance market performance.

Transitioning towards circular households: Exploring influential factors and constraints

The adoption of household circular economy practices is fundamental for sustainable consumption, yet this area remains underexplored, with individuals unaware of the societal impact they can make. While previous research has examined the drivers and barriers linked with the implementation of circular strategies in organizations, eco-industrial parks, and cities, there is limited understanding of the factors influencing household circular economy activities. Thus, the present work aims to identify what drives and inhibits individuals from fostering circular economy progress at the household level. This study is supported by a triangulation approach, combining an integrative literature review with the results derived from semi-structured interviews with householders. The literature review helped categorize the data obtained through the interviews, while outlining the existing theories. The findings of the interviews indicate that the drivers and barriers could vary between consumer stages – i.e., customer, user, end of life product holder. The householders can be negatively influenced by the lack of awareness, poor reputation, and a circular market offer with insufficient quality. The adoption process of circular economy-related practices depends on the attitude of each individual and can be driven by the possibility to reduce the cost of living, and the ability of the product to include digestible information, regarding its sustainability performance. Householders identified several recommendations that could promote circularity, such as implementing subsidies with reduced bureaucracy to alleviate initial financial pressures and improving transparency and disclosure of product sustainability (e.g., through a sustainability score). This research can capacitate policymakers and practitioners with insights into the factors that foster circular economic progress at the household level, outlining a structure tailored towards the desired consumer role.

The Nexus between Corporate Governance and Economic, Social and Environment (ESE) Practices: Bangladeshi Banking Paradox

This study aimed to investigate the relationship between corporate governance and sustainability practices at 45 scheduled commercial banks in Bangladesh. The study specifically focused on the impact of corporate governance on bank sustainability practices, using the Global Reporting Initiative (GRI-4) sustainability guidelines. The resource-based view theory was used to explain the relationship between corporate governance and sustainability practices. Panel data used for this analysis was derived from the annual and sustainability disclosure reports of these banks from 2017 to 2021. This study explores dimensions of corporate governance, including board size, independent board members, CEO duality, gender diversity, audit committees, risk management committees, and audit firm size, highlighting their importance in strategic decision-making. It also explores sustainability practices from a corporate perspective, focusing on economic, social, and environmental performance indicators and emphasizing the importance of strategic resource allocation and disclosure. Four hypotheses were formed, and ordinary least squares (OLS) regression was employed to test the relationship between corporate governance and bank sustainability practices. The statistical results showed that CG has a direct effect on firms overall sustainability as well as social and environmental sustainability practices. It was also seen that the size of the board has a significant effect on the overall sustainability measures (ESE). The study suggests that pro-active measures should be taken to improve sustainability practices in Bangladesh.

소비자 안전보건을 위한 ESG 공시기준에의 제품안전 지표설정 연구

ESG management has now become a new management paradigm both domestically and internationally. ESG is a non-financial performance indicator to achieve corporate sustainability, and encompasses responsibilities and obligations to stakeholders. Recently, as the safety issue of overseas products imported from online shopping malls in China has emerged, the need to ensure consumer safety and health from hazardous products is increasing. Accordingly, the establishment of product safety disclosure standards for consumer protection is required in the ESG information disclosure process. In this paper, in order to establish product safety indicators for sustainability disclosure standards for ESG management, the disclosure standards of major domestic and foreign initiatives were reviewed and analyzed to examine the introduction of product safety-related indicators, and product safety indicators that can be set for consumer safety and health were developed and presented. As product safety indicators, this paper first presented the occurrence of illegal and defective products, occurrence of product accidents, block hazardous products, number of recall orders and recommendations, and recall recovery rate as indicators that can be introduced throughout the entire product life cycle. In addition, the product risk level, the number and ratio of products for which risk assessment was performed, and the methods and standards used for risk assessment were presented as indicators related to product risk that indicate the level of impact of the product on consumer safety and health. In addition, the consumer safety index was presented as an indicator related to product safety accidents that occur during the consumer product use phase. The consumer safety index is an index that allows consumers to directly feel the level of product safety due to product accidents that occur when consumers use the product. It can be said to be a product safety index from the consumer's perspective that can protect consumer safety.

Debtholders' reaction to sustainability reporting regulations: International evidence

AbstractThis study investigates the impact of mandatory sustainability reporting on the affected firms' debt financing costs. Leveraging sustainability disclosure regulations enacted in 36 jurisdictions from 1998 to 2022 and using a staggered difference‐in‐differences empirical approach, we find that the regulation adoption firms experience a reduction in the debt financing cost subsequent to the mandate. Channel tests reveal that the benefit of a lower cost of debt is driven by greater transparency on sustainable practices and improved sustainability performance, which lead to a lower level of default risk stemming from sustainability‐related concerns. Cross‐sectional analyses further indicate that the debt financing cost reduction effect is more pronounced if the sustainability reporting regulations are issued by a government institution, on a full compliance basis, and with stronger enforcement. Our results provide policymakers with further evidence on the ongoing discussion about the effectiveness of sustainability disclosure mandates.

DOES SUSTAINABILITY DISCLOSURE HAVE A MODERATING ROLE IN EXAMINING FIRM VALUE IN BANKING INDUSTRY?

This study seeks to experimentally assess the impact of financial performance on the firm value of the banking subsector and examine sustainability disclosure as a moderating variable. The study focused on banking subsector companies listed on the IDX in 2020-2022. Multiple linear regression was used to test cross-sectional data processed with Eviews 12. The test results demonstrate that profitability has a considerable beneficial impact on firm value. Meanwhile, leverage minimizes firm value because the primary banking business process involves consumer loans and receivables. Therefore, investors pay little attention to company debt. Sustainability disclosure cannot balance the relationship between financial success and firm value. The sustainability disclosures need to meet investors' expectations. Stakeholders may have differing perspectives on the relevance and influence of sustainability data on profitability and firm value.

The Impact of Corporate Governance on Sustainability Disclosures: A Comparison from the Perspective of Financial and Non-Financial Firms

The Impact of Corporate Governance on Sustainability Disclosures: A Comparison from the Perspective of Financial and Non-Financial Firms

Exploring ESG Disclosure: What? And Why? A Study of Leading European Public Hospitals

Abstract The purpose of the article. This article aims to examine the sustainability disclosure practices of public hospitals within the European Union. It aims to identify the scope and trends in environmental, social and governance (ESG) information reported by these hospitals on their official websites and analyze the influence of national frameworks on these practices. Methodology. The study employs a manual content analysis of the official websites of 50 public hospitals from EU Member States, selected from Newsweek’s The World’s Best Hospitals 2024 list. An ESG Disclosure Index (ESG DI) was developed to evaluate the extent of sustainability information disclosed. The index includes 36 items across various sustainability dimensions. Results of the research. The results show that the surveyed hospitals disclosed an average of 48% of the ESG metrics. Governance issues were disclosed the most (59%), followed by social (52%) and environmental (47%) dimensions. Scandinavian hospitals had a higher level of disclosure than their Southern European counterparts. The study highlights the fragmented nature of sustainability disclosure, which tends to report better performing indicators while selectively omitting others.

Sustainability Reporting and Financial Performance: Examine the Correlation between Sustainability Disclosures Financial Performance in Publicly Traded Companies

Sustainability reporting has increasingly gained prominence in academia and practice over the past few decades. With growing stakeholder expectations for companies to report on environmental, social, and governance issues, sustainability reporting allows companies to communicate non-financial impacts. While sustainability reporting aims to enhance accountability and transparency, questions remain regarding its influence on corporate financial performance. Some studies have found a positive correlation between sustainability reporting and financial metrics like profitability and share price, arguing reporting leads to more efficient resource management and risk mitigation. However, other research has found no significant relationship or negative impact, noting that reporting requirements incur costs that may outweigh benefits. This comprehensive review aims to provide an in-depth analysis of the existing literature on the correlation between sustainability disclosures and the financial performance of publicly traded companies. Relevant studies from various regions and sectors published between 1990 and 2023 will be reviewed. The methodologies applied, measurement variables, sample sizes, and time frames considered will be evaluated to understand the scope and limitations of each study. Key findings related to the direction and strength of the reported relationship between the two parameters will be summarized and compared. Moderating factors such as company size, industry, cultural context, and disclosure type will also be examined to determine their influence on research outcomes. The review will conclude by outlining existing knowledge gaps, inconsistencies in current empirical evidence, and areas that require further research.

SUSTAINABILITY DISCLOSURES AND PROFITABILITY OF LISTED OIL AND GAS FIRMS IN NIGERIA

This study examined the effect of pillars of sustainability disclosure on profitability (return on asset) of oil and gas firms in Nigeria. The specific objectives of the study were: to examine the effect of social, economic and environmental pillars of sustainability disclosures on return on assets of Oil and Gas firms in Nigeria. The population of the study was made up of all the manufacturing Oil & Gas firms listed in Nigerian Exchange Group, while Con-oil, Forte Oil, Capital Oil, Total Nigeria and MRS oil Nigeria were selected. The statistical tool used was multiple regression analysis, and the findings revealed that social, economic and environmental pillars of sustainability disclosures have no significant effect on Return on Assets (ROA) of Oil and Gas firms in Nigeria. The study recommended that Oil & Gas manufacturing firms should ensure that they report their social, economic and environmental activities in order to enhance their performance level and compete favorably in Oil sector. This will also enable all the stakeholders appreciate firms’ annual report and put reliance on the published financial statements in their investment decisions. When a firm enjoys legitimacy, the performance of the organization will be improved significantly. The study also recommended that there should be standardized Sustainability Index for ranking firms’ reportage in order for the firms to adhere strictly to voluntary and mandatory disclosures.

Impact of The Corporate Governance on Sustainability Report Disclosure with Environmental Performance as A Moderation Variable in Indonesia

This study aims to analyze the effect of corporate governance on sustainability report disclosure, with environmental performance acting as a moderating variable. The analysis focuses on the role of the board of directors, independent commissioners, audit committees, and financial performance in influencing the quality of sustainability reporting, particularly within the Indonesian context. Environmental performance is measured using the PROPER scale. The study utilizes data from the annual and sustainability reports of 20 companies in the basic materials and energy mining sectors listed on the Indonesia Stock Exchange from 2018 to 2022, amounting to 100 observations. The data is processed using SPSS 23. The results show that the presence of female directors significantly enhances the quality of sustainability disclosures, as they tend to prioritize social responsibility. Moreover, financial performance, as measured by Return on Assets (ROA), positively affects sustainability reporting, with companies in better financial health being more transparent in their disclosures. Environmental performance, when combined with strong independent oversight, further improves reporting quality, reflecting the positive influence of independent commissioners and sound financial governance. The study concludes that environmental performance, as measured by the PROPER scale, plays a significant role in improving sustainability disclosures in Indonesia. It recommends that the Indonesian government provide stronger support and clearer regulations to help companies improve their sustainability practices and contribute to the G20 agenda.

What Gets Measured, Gets Managed: The Role of Sustainability Assurance in Green Transformation

Sustainability assurance (SA), an independent third-party evaluation aimed at enhancing the credibility of corporate sustainability disclosure, plays a vital role in fostering corporate green transformation. This paper systematically examines the impact of SA on corporate green transformation and the mechanisms through which it operates, using data on SA reports and green patents from A-share listed companies in China between 2010 and 2022. The findings reveal that SA significantly promotes corporate green transformation, particularly when conducted in accordance with standard ISAE 3000. Mechanism analysis indicates that SA facilitates green transformation by reducing the cost of credit and promoting risk-taking behaviors. Heterogeneity analysis further demonstrates that the positive effects of SA on green transformation are more pronounced in heavily polluting and competitive industries as well as in firms with weaker internal and external governance. This study not only underscores the beneficial impact and underlying mechanisms of SA on corporate green transformation but also contributes to the broader literature on the drivers of corporate green transformation.

Toward More Nature-Positive Outcomes: A Review of Corporate Disclosure and Decision Making on Biodiversity

Loss of biodiversity and natural degradation are vital issues that have significant impacts on society and economy. Businesses, investors, and regulators have focused on corporate efforts to support biodiversity and nature-positive activities. This review provides a comprehensive overview of the importance of biodiversity for businesses, its materiality, and the roles of mandatory and nonmandatory regulations in corporate environmental reporting and sustainability disclosure frameworks. It also discusses descriptive information on the evolution of sustainability frameworks by comparing the most prominent sustainability frameworks, with a key focus on the materiality approach and biodiversity-related disclosure recommendations. Furthermore, we provide recommendations for more holistic approaches to improve future sustainability frameworks focusing on the impact of biodiversity. Additionally, we demonstrate the necessity for greater focus on the decision-making paradigm. Further research to measure the impact of biodiversity and innovative trends in sustainability reporting is required to better reflect nature-positive outcomes in corporate sector businesses.

Corporate governance mechanisms and the quality of sustainability reporting – results from a systematic literature review

Purpose: The article investigates the extent to which corporate governance mechanisms have been researched in the context of sustainability reporting quality, given the lack of a standardized non-financial reporting framework and the use of different reporting guidelines by companies.Methodology/approach: We conducted a systematic review of the literature, which included 20 publications carefully selected from 881 publications extracted from the EBSCO database and Google Scholar.Findings: The literature review identified the impact of key corporate governance instruments/mechanisms/attributes on the quality of reporting disclosures, mainly in the area of social responsibility and, to a lesser extent, (developing) sustainability reporting. The results were analyzed geographically, culturally and contextually, with a primary focus on listed companies. Research limitations/implications: The literature review was limited to two databases and academic articles in English and Polish.Originality/value: This is one of the first studies to document the state of research to date on the quality of sustainability disclosures in conjunction with corporate governance.