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Integrating Enterprise Risk Management on the Nexus of Sustainability Reporting and Firm Performance: A Conceptual Study

Syed Quaid Ali Shah ^a

Lai Fong Woon ^a

Muhammad Kashif Shad ^a

Salaheldin Hamad ^b,c

^{^a}Universiti Teknologi PETRONAS, Malaysia

^{^b}Kafrelsheikh University, Egypt

^{^c}The Pentland Centre for Sustainability in Business, Lancaster University, United Kingdom

The Emerald Handbook of Ethical Finance and Corporate Social Responsibility

ISBN: 978-1-80455-407-4, eISBN: 978-1-80455-406-7

Publication date: 6 May 2024

Abstract

The primary objective of this research is to conceptualize the integration of enterprise risk management (ERM) as a mechanism to enhance the connection between corporate sustainability (CS) reporting and financial performance. This study suggests that future researchers should validate the proposed conceptualization by conducting a comprehensive content analysis of sustainability reports of Malaysian oil and gas companies. This analysis will allow for the collection of pertinent data regarding CS reporting and ERM implementation. The present study takes a comprehensive approach by integrating legitimacy, stakeholder, and resource-based view (RBV) theories, proposing a robust conceptual design that emphasizes the role of ERM in the connection between CS reporting and firm performance. Drawing on theoretical foundations, this study proposes that CS reporting will have a direct effect on financial performance. Moreover, the integration of ERM serves to strengthen the nexus between CS reporting and financial performance. This study offers valuable insights for stakeholders in the oil and gas sector by providing strategic guidance to enhance financial performance not only through CS reporting but also by implementing ERM. Moreover, the framework proposed in this study is expected to bring tangible and intangible benefits to corporations, including reducing information asymmetry, improving the quality of disclosure, and creating value within the field of CS. The proposed conceptual framework holds great significance as it enhances the applicability of legitimacy, stakeholder, and RBV theories, while also creating value for stakeholders through CS reporting and the adoption of risk management practices to enhance financial performance.

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Acknowledgements

Acknowledgments

The authors would like to acknowledge Universiti Teknologi PETRONAS (UTP) Short Term Internal Research Funding (STIRF) for funding this research under Cost Center: 015LA0-028.

Citation

Ali Shah, S.Q., Woon, L.F., Shad, M.K. and Hamad, S. (2024), "Integrating Enterprise Risk Management on the Nexus of Sustainability Reporting and Firm Performance: A Conceptual Study", Hunjra, A.I. and Hussainey, K. (Ed.) The Emerald Handbook of Ethical Finance and Corporate Social Responsibility, Emerald Publishing Limited, Leeds, pp. 565-579. https://doi.org/10.1108/978-1-80455-406-720241025

Publisher

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Emerald Publishing Limited