Investigating the Effects of Different Sustainability-Linked Reporting Frameworks on Firm Performance

Abstract

In the past decades, the focus on sustainability has significantly increased, and with it the need for qualitative sustainability reporting frameworks. Current research indicates a primarily positive relationship between sustainability disclosure and firm financial performance, but it mainly focuses on relationships between individual disclosure frameworks and firm performance. By using a sample consisting of the firms from the S&P500 index between 2018-2022, this research attempts to compare the effects of different sustainability-linked reporting frameworks, especially examining whether a difference exists between the effects of these frameworks. Fixed effects and random effects panel regression analyses on the individual and joint models, whilst controlling for both firm-specific and macro-economic factors, indeed indicate such a difference: GRI disclosure is found to have a significant and sizable positive effect on firm performance, whereas the effect of SASB disclosure appears to be negative. Even in the joint models and after clustering, most of these results remain similar.