International Perspectives on Sustainability Reporting

This chapter covers a full picture of the remaining chapters. The first part discusses the gap in the literature and the main objectives of this book. The next section overviews the book's design and methodology which includes the conceptual model, the research design and the research methodology. The final section in this chapter is the book's theoretical and practical contributions.

This chapter reviews different definitions of firm's sustainability then clarifies own definition. The definition consists of three dimensions of firm sustainability other than the economic – namely, environmental, social and governance which have been discussed and analysed separately in this chapter. In the last section of this chapter, the combination of the three dimensions of firm sustainability (environmental, social and governance) are jointly considered and analysed.

This chapter covers the history and development of sustainability reporting. Four phases are discussed; the first phase began during the 1950s and this is associated with the development of the term corporate social responsibility (CSR). The second phase explains the development of the ‘environmental dimension’ which started in the 1980s. The third phase was in the early 1990s, and the concept of sustainability reporting covering the social, environmental and economic dimensions has been appearing. The last phase was in 2010, where the GRI announced the integrated reporting framework which brings together economic, environmental, social and governance information.

This chapter reviews the context of sustainability reporting law and regulations worldwide. Based on the discussion, a conceptual framework has been developed to investigate the moderating role of sustainability reporting law (SRL) on the relationship between sustainability reporting and firm's performance. The findings reveal that the inclusion of SRL as a moderating variable positively affects the relationships between the E, S and G components and operational performance.

This chapter reviews the relevant theories associated with sustainability reporting, in its first section nine theories supporting sustainability reporting were discussed. In the following section four theories against sustainability reporting were explained. The last section is the theoretical framework used in this book. The theoretical framework built based on integration of three theories: stakeholder theory, legitimacy theory and political-economy theory.

Two debates appear about sustainability disclosure. The cost of capital perspective argues that reporting ESG increases costs. The value creation perspective, by contrast, argues that ESG disclosure is a tool to generate competitive advantages and improve financial performance. In this chapter the benefits of and costs of disclosing sustainability reports are reviewed.

The chapter reviews the literature on the relationship between sustainability reporting and firm performance. The first section discusses and investigates the relationship between sustainability reporting and operational performance (ROA). The second section discusses and investigates the relationship between sustainability reporting and financial performance (ROE). The third section discusses and investigates the relationship between sustainability reporting and market performance (TQ). The last three sections explain the possible reasons for positive, negative and neutral relationship between sustainability reporting and firm performance.

This chapter covers the effect of country's economic and political situation on sustainability reporting disclosure (in particular the corporate social responsibility aspect). The first section discusses the previous empirical studies in this topic. Based on this, the second section develops the theoretical framework in order to examines the moderating role of a country's economic activities (GDP) and political or institutional quality (IQ) on the relationship between corporate social responsibility disclosure (CSRD) and a banks' operational, financial and market performance. For this purpose, we used ordinary least square (OLS), panel fixed-effect regression and IV-GMM to estimate the parameters of the models. We find that the CSRD scores negatively influences bank's performance. The moderator of CRSD and the level of economic activities have a positive influence on that bank's performance. However, the moderator (CRSD and country's institutional quality), while showing positive relationship with bank's performance, has a significant effect only on bank's operational and financial performance.

This chapter discusses and investigates the sustainability reporting across different sectors. The first section discusses and investigates the relationship between sustainability reporting and primary sector's performance (Agriculture and Food Industries Sector and Energy Sector). The second section discusses and investigates the relationship between sustainability reporting and secondary sector's performance (Manufacturing Sector). The final section discusses and investigates the relationship between sustainability reporting and tertiary sector's performance (Banks and Financial Services Sector, Retail Sector, Telecommunication and Information Technology Sector, and Tourism Sector).

The last chapter of this book grouped the studies that discusses and investigates the relationship between sustainability reporting and firm performance in three different regions: Europe, Mena and Africa. In Europe, the findings deduced from the empirical results demonstrate that there is significant positive impact of ESG on the performance. However, the relationship between ESG disclosures varies if measured individually; the environmental disclosure positively affects the ROA and TQ, whereas the corporate social responsibility disclosure negatively affects the three models. However, the corporate governance disclosure negatively affects the ROA, ROE and positively affect the Tobin's Q. In Mena, the empirical results show that there are differences in the impact of sustainability reporting (ESG) on firm's operational performance (ROA), financial performance (ROE) and market performance (TQ) between the sectors. Lastly, the findings from Africa show that there is a significant relationship between ESG and operational performance (ROA) and market performance (TQ) with ROA and TQ varying directly with the level of ESG disclosure. However, there is no significant relationship between ESG and financial performance (ROE).