Articlehybrid2024

From sustainability to financial performance: the role of SDG disclosure

Valentina Beretta · Chiara Demartini · Sara Trucco

29 citations0/0 files storedMeasuring Business Excellence

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Corporate Social Responsibility Reporting Corporate Governance and Financial Management Sustainability and Innovation in Business

Abstract

Purpose Despite the rising trend of sustainable developmental goals (SDGs) incorporation into sustainability reporting, there remains a gap in understanding the role of SDG disclosure (SDGD) in the relationship between sustainability and financial performance. Thus, this study aims to investigate the relationship between sustainability performance and the level of SDGD; the relationship between sustainability performance and financial performance; and the link between the level of SDGD and financial performance. Design/methodology/approach Conducted in Italy, the analysis involves manual collection of sustainability reports from company websites for the fiscal years from 2019 to 2022, followed by textual analysis to identify SDG-related content disclosed in nonfinancial reports. Financial and nonfinancial data from Orbis and LSEG databases are used for regression analysis on panel data. Findings Findings align with existing literature, emphasizing the partial mediator role played by the level of SDGD in the relationship between sustainability performance and financial performance, measured by return on equity. In addition, the study suggests that there is a positive relationship between sustainability performance and the level of SDGD and a positive relationship between the level of SDGD and financial performance. Originality/value This study contributes to a deeper understanding of how SDG disclosures function within the broader nexus of sustainability performance and financial outcomes. Findings from this study provide empirical support for the argument that SDGD is not merely a regulatory compliance tool but also a strategic asset that can enhance a firm’s financial performance.

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References

1982Asymptotic Confidence Intervals for Indirect Effects in Structural Equation Models 1981Panel Data and Unobservable Individual Effects 2003The relations among environmental disclosure, environmental performance, and economic performance: a simultaneous equations approach 2015Does Corporate Social Responsibility Lead to Superior Financial Performance? A Regression Discontinuity Approach 1997The Corporate Social-Financial Performance Relationship 2002Exploring the Locus of Profitable Pollution Reduction 2006Corporate Reputation and Social Performance: The Importance of Fit 2015Organized hypocrisy, organizational façades, and sustainability reporting

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