Sustainability reporting and financial performance: Evidence from Australia’s electricity companies

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Abstract

This study, based on the stakeholder theory, explores the relationship between Australia’s electricity companies’ sustainability reporting practices and their financial performance. This paper uses the GRI G4 sector-specific guidelines to examine Australia’s electricity companies’ disclosure level on sustainability, return on assets to assess the companies’ performance, and descriptive statistics and multiple regression to test hypotheses. Relying on the secondary data collected from companies’ annual reports, websites, corporate social responsibility (CSR) reports, or standalone sustainability reports, the regression results show that the sustainability reports have a connection with the companies’ performance. Additional analysis also reveals that only economic and social performance disclosures of sustainability reporting significantly influence the companies’ performance. Though earlier studies on the relationship between sustainability reporting and financial performance have mostly been based on international data, this paper inspects the connection between the adoption of sustainability reporting and the financial performance of electricity companies within Australia that provide essential services to society and have a significant influence on sustainable development. Moreover, this research arbitrates prior inconsistent findings (Garg & Gupta, 2020; Bhattacharyya & Rahman, 2019; Sila & Cek, 2017) and adds to the sustainability reporting and firms’ performance literature.

Keywords: Sustainability Reporting, Financial Performance, Stakeholder Theory, Electricity Companies, Australia

Authors’ individual contribution: The Author is responsible for all the contributions to the paper according to CRediT (Contributor Roles Taxonomy) standards.

Declaration of conflicting interests: The Author declares that there is no conflict of interest.

JEL Classification: L25, M41, Q56

Received: 12.10.2021
Accepted: 21.01.2022
Published online: 24.01.2022

How to cite this paper: Mamun, M. (2022). Sustainability reporting and financial performance: Evidence from Australia’s electricity companies. Corporate Governance and Sustainability Review, 6(1), 15–21. https://doi.org/10.22495/cgsrv6i1p2