The current issue and full text archive of this journal is available on Emerald Insight at:

www.emeraldinsight.com/1477-7835.htm

MEQ
30,1 Is sustainability reporting (ESG)
associated with performance?
Evidence from the European
98 banking sector
Received 4 December 2017
Revised 27 February 2018
Amina Buallay
Accepted 28 February 2018 Brunel University, Uxbridge, UK

Abstract
Purpose – Sustainability reporting has been widely adopted by firms worldwide given the need of
stakeholders for more transparency on environmental, social and governance (ESG) issues. The purpose of
this paper is to investigate the relationship between ESG and bank’s operational (Return on Assets), financial
(Return on Equity) and market performance (Tobin’s Q).
Design/methodology/approach – This study examined 235 banks for ten years (2007-2016) to ends up
with 2,350 observations. The independent variable is the ESG disclosure; the dependent variables are
performance indicators (return on assets, return on equity and Tobin’s Q). Two type of control variables are
utilized in this study: bank specific and macroeconomic.
Findings – 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 is vary if measured
individually; the environmental disclosure found positively affect the ROA and TQ. Whereas, the corporate
social responsibility disclosure is negatively affect the three models. However, the corporate governance
disclosure found negatively affects the ROA, ROE and positively affects the Tobin’s Q.
Originality/value – The results of this study can be used to present a successful model for worldwide banks
to concentrate on the role of ESG disclosure in performance.
Keywords Performance, Banks, ESG disclosure, European Union countries, Sustainability reporting
Paper type Research paper

1. Introduction
As the worldwide economies are increasingly interconnected through trade and investment,
mainly due to the growth of multinational companies from the developed countries (Li and
Gaur, 2014), the issues of what to disclose have been playing, and what kind of reporting
should be disclosing for national and international stakeholders become more important, not
only for stakeholders but also for worldwide policy makers.
Thus, financial accounting is not sufficient to meet the needs of shareholders; further
reports have been established such as, intellectual capital statements, value reporting, and
sustainability reports (Wulf et al., 2014). However, there is a notable absence of the sustainable
discourse that could be a tool for enhancing the performance. The resource-based perspective
of firm suggests that firms gain superior performance when they disclose the financial and
non-financial resources. These resources help firms develop capabilities and competencies,
which are essential for achieving sustainable competitive advantage (Gaur et al., 2011).
According to the United Nations Sustainable Stock Exchange, all listed firms are
expected to disclose their impact from environmental, social and governance (ESG) practice
by 2030 at the latest (Sustainable Stock Exchanges, 2015). Since ESG information is
non-financial disclosure and does not pursue a standard format like the financial disclosure,
ESG disclosure tends to vary significantly (Elzahar et al., 2015).
Management of Environmental
Quality: An International Journal In line with this, there are studies showing that ESG disclosure varies across firms and
Vol. 30 No. 1, 2019
pp. 98-115
countries (Ioannou and Serafeim, 2017; Reverte, 2009). This is because of information
© Emerald Publishing Limited
1477-7835
content freedom and un-unified format being disclosed by the management. Duuren et al.
DOI 10.1108/MEQ-12-2017-0149 (2016) found that the European managers view ESG in substantially different ways.
Moreover, Baldini et al. (2016) argue that country-specific factors such as governance, labor, Evidence from
and economy are significantly affect firms’ ESG disclosure. In this regards, it is important to the European
investigate the relationship between ESG and performance within country-specific factors. banking sector
Therefore, a question about whether or not ESG disclosure prompts current and future
value creation within European countries need to be answered.
The European countries are the leading countries when it comes to advocating
sustainable development. We selected the listed banks on the European Union countries as 99
our research object as they are supporting the social and economic development. Presently,
banking sector plays an important root for development and growth of the European
economy by facilitating the financial transactions.
Sustainability reporting performs as a new disclosure philosophy that concentrates on
creating future value related to the business policy. In this study, we discuss the prior
literature and highlight theories supporting sustainability reporting. This study goes beyond
prior researches by considering the current performance (ROA and ROE) and future value
(Tobin’s Q) that can give us further insights about ESG performance. More comprehensively,
the study takes into consideration the effect of macroeconomic variables (governance and
GDP) in order to control the relationship between ESG and performance across the countries.
The social, environmental and governance practices are assumed to be significant for
all stakeholders; hence the relationship between ESG disclosure and performance need to
be highlighted. This study contributes to literature in many ways. First, it sheds the light
on the rare prior ESG studies in relation to current (operational and financial performance)
and future (market performance). Second, it provides empirical evidence on the level of
ESG in European Union banks as leaders in sustainable development. Thus, the results
are expected to broaden the understanding of banks sustainability which eventually
affects the European country’s sustainable development. Finally, this study will help the
stakeholders, investors, decision maker, regulators, policy makers and scholars to
improve their knowledge about sustainable disclosure practices in relation to current and
future performance.
The study is divided into the following sections: Section 1 being introduction, further
part of this study is divided into five sections. Section 2 discusses literature review and
developing hypotheses. Section 3 presents the design and research methodology. Section 4
shows the descriptive statistics. Section 5 presents empirical analysis results. Section 6
presents the study’s conclusion, recommendations and the scope for further research.

2. Literature review and hypothesis development

2.1 The significance of sustainability reporting (ESG)
The sustainability reporting advocators believed that promoting the disclosure of ESG will
benefit both the company and stakeholders. Sustainability reporting often enhanced as
actions that lead to superior external and internal decision-making, greater transparency,
simultaneously enforcing financial stability and contributing to a better social sustainable
(Eccles et al., 2015; Eccles and Saltzman, 2011; Krzus, 2011).
Moreover, it shows the full picture of a firm future performance as its shows the financial
performances and non-financial performances ( Jensen and Berg, 2012). Recently, there are
many studies supporting the disclosure of ESG suggesting that sustainable reports bring
more transparency by showing the links between financial and ESG (Adams, 2017). Steyn
(2014) found that sustainability reporting is contributed to better business with higher
financial performance. In addition, the ESG disclosure enhances the corporate reputation
and creates significant competitive advantages (Lee Brown et al., 2009; Gardberg and
Fombrun, 2006; Simnett et al., 2009).
With the increasing of world economies integration and the growth of large firms, the
disclosure of corporate governance has emerged as an important issue for managers as well
MEQ as stakeholders all over the world (Singh and Gaur, 2009). The disclosure of governance is a
30,1 response to the prevailing institutional environment and it affects the stakeholder’s
decision-making (Singh and Gaur, 2013).
Popli, Akbar, Kumar and Gaur (2017) and Popli, Ladkani and Gaur (2017) found firms
that shape their responses in synchronization with the changes in the external environment
is in the best position to mitigate the erosion of their profitability. Therefore, the
100 environmental disclosure is necessary to make profit. Moreover, social activities must
necessarily be disclosed in the formal and informal way (Hwang and Gaur, 2009), which
helps the investors and stakeholders to know the social responsibility of the firm.

2.2 Measurement of sustainable report

Many literatures have investigated the relationship between ESG performance and
performance. However, the results have been equivocal, partly because of measurement
concerns or data constraints (Li et al., 2017).
Various sustainability reporting methods adopted worldwide to measure the ESG
performance of firms. Table I summarized the criteria and methodology used in each method.

2.3 Sustainable report and performance

To answer the question about why ESG should enhanced the performance; a closely
accepted theory is the “cost of capital” reduction. The current standpoint is that the costs
incurred in a firm by the establishment of a socially responsible structure in a firm are
parallel by a reduction in its cost of capital. In regard of this, Mackey et al. (2007) suggested
that a social responsible behavior is a “product” sold by firms to investors. However, is this
product a gainful for a firm? Prior researches tend to confirm that the effect of investors’
perception on the cost of capital is not important one. El Ghoul et al. (2011) found that lower
the cost of capital, the higher is the sustainability reporting score, bringing a renewed
interest in the cost of capital theory. Thus, from a marketing view, adopting a sustainable
policy would have positive impact on the cost of capital. Waddock and Graves (1997)
expounded a significant relationship between a firm’s reputation and its social policy.
Albuquerque et al. (2012) believed that ESG is a strategic product that brings more profits.
Another studies looked at the information effect of ESG and firms’ performance. Sharfman
and Fernando (2008) debated that the disclosure of the non-accounting information gives us
an indicator about how the firm controls the business risks. Therefore, higher ESG scores
the lower business risks.
Besides, Porter (1991) clarifies the anticipation theory; he assumes two benefits: first,
sustainable firms are expected to have lower costs in relation to future regulations.
For example, the cash flow stability comparing to other firms increased paying to adapt
the new regulations on current years. Second, firms putting established regulations before
competitors are leaders in best practices, which promoted its wealth and eventually the
wealth of its stakeholders.
Moreover, the instrumental theory of corporate social responsibility developed by
Garriga and Melé (2004) which is supported by Eccles et al. (2012), who expounds the theory
from a management viewpoint; how the innovation in strategy, plans, process and products
in sustainable firms leads to superior performance.
On the other hand, we found some theories focusing on the negative side of ESG and
firm’s performance. In contra to the stakeholder theory, Friedman (1962) stated that the
main purpose of a firm is solely to increase the wealth of its stakeholders, and any other
non-financial objectives will make the firm least effective. Some researches supported his
arguments such as Mackey et al. (2007), Zivin and Small (2005); they debate that investors
expect from a firm to increase its wealth without sustainable policy, and that sustainable
policy should be done by non-profit organization, e.g., charity. The investors investing in a
Number Method Purpose Criteria Methodology Reference
Evidence from
the European
1 Kinder Evaluates a firm’s The criteria are Deducting the Hillman and banking sector
Lydenberg environmental, divided into two “concerns” from the Keim (2001)
Domini (KLD) social and broad categories: “strengths” to reach
governance “strengths” and at a single net value
performance “concerns” using a binary values
where “1” indicates 101
the presence of a
particular issue and
“0” indicates the
absence of an issue
2 Ethical EIRIS is an It covers 87 criteria Each item is rated on EIRIS (2011)
Investment independent, non- including climate an interval scale as
Research and profit corporation change, human rights, follows:
Information which act as a supply chain, labor −3 (High negative),
Service global leading standards, relations −2 (Medium
(EIRIS) provider of with customers and Negative), −1 (Low
research into suppliers, stakeholder Negative), 0 (Neutral),
corporate engagement, board 1 (Low Positive), 2
environmental, practices and risk (Medium Positive), 3
social and management (High Positive)
governance
3 Sustainable SAM provides a The questionnaire The results of this United
Asset set of targeted at CEOs, questionnaires are Nations
Management questionnaires investor relations, weighted and Environment
(SAM) sustainability included in the Dow Programme
departments and Jones Sustainability (2011)
public affairs Index (DJSI)
4 Asian ASR provides set Criteria are grouped Scoring is done by a Asian
Sustainability of 100 criteria into four main criteria:
group of experienced Sustainability
Rating (ASR) surrounding general, investment analysts Rating (2011)
sustainability environmental, social in Singapore where
and governance one point is awarded
for every criterion on
the list
5 Dow Jones DJSI provides The benchmark is Firms are filtered out DJSI (2011)
Sustainability global based on the top 2,500 as part of the DJSI
Index (DJSI) sustainability firms in terms of construction process
benchmark market capitalization and then monitored
across sectors on a continuous basis
6 Morgan MSCI provides MSCI generates These scores are MSCI (2011)
Stanley investment scores for each aggregated to form
Capital decision support applicable criterion one composite ESG
International tools to over 5,000 (environmental, social score, where AAA
(MSCI ESG clients on pension and governance) represents the
indices) funds and hedge highest sustainability
funds performance while C
represents the lowest
sustainability
performance
7 Financial The FTSE4Good Five core areas Review of annual Financial
Times Stock was developed to included: reports, research of Times Stock
Exchange provide investors a environmental corporation websites Exchange
(FTSE4Good means by which sustainability, and through written (2011)
index) they could identify upholding and questionnaires and
Table I.
Sustainability
(continued ) reporting methods
MEQ Number Method Purpose Criteria Methodology Reference
30,1
and invest in supporting universal publicly available
corporations that human rights, material
meet the minimum ensuring good supply
requirement of chain labor standards,
socially countering bribery
102 responsible and mitigating
practices climate change
8 Bloomberg Encourage There are four major Weightings differ by Suzuki and
ESG corporations to categories namely sectors. For example, Levy (2010)
disclosure disclose more ESG environmental the omission of the
scores data, Bloomberg disclosure score, number of fatalities
decided to score social disclosure would not be
corporations based score, governance considered
on their ESG data disclosure score and significant for a retail
disclosure. The ESG disclosure score corporation but will
Bloomberg ESG (overall combination be punitive for a
Disclosure Score of environmental, corporation in the oil
out of a 100 is social and governance and gas sector
based on GRI’s disclosure scores)
guidelines
9 Trucost Trucost creates There are four major Trucost have Trucost (2013)
environmental steps in the developed two
profiles of evaluation process environmental
corporations indicators namely an
accounting for 464 absolute disclosure
industry sectors ratio and a weighted
worldwide and disclosure ratio
monitors about 100
different types of
environmental
Table I. impacts

firm with sustainable activities limit the consumption choice where the social and voluntary
part is going to the firm, hence he anticipates a lower cost of capital from the firm. Another
argument (Hong and Kacperczyk, 2009; Statman and Glushkov, 2009) found that superior
ESG performance is not reflected in the share price.
To conclude, building-up an ESG policy within a company has some costs that the firm
expects to be compensated by positive performance effect, revenue stability and lower
return from investors. The firm also can lower its risk and becomes more effective. In line
with the previous literature and the theories supporting the ESG, our first hypothesis
is therefore:
H1. There is positive relationship between ESG and operational performance (ROA).
The ESG practices could be seen as portion of the goodwill. Therefore, positive ESG score
believed to lead to greater return on assets:
H2. There is positive relationship between ESG and financial performance (ROE).
As noted in the literature, the sustainable action is expected to create higher demand and
greater growth for the firms. These firms should realize the ESG added value which lowers
the business risks. Margolis et al. (2007) found that there is a significant positive relationship
between ESG and financial performance:
H3. There is positive relationship between ESG and market performance (Tobin’s Q).
Barth et al. (2016) found that ESG is positively associated firm value (using Tobin’s Q as a Evidence from
measure). The positive relationship between ESG and firm value is driven by the cash flow the European
which leads to higher market prices. banking sector
3. Research methodology
3.1 Study population, sample and resources of data
The study depends on the selected sample, which are 2,350 observations derived from 103
235 listed banks on the European Union countries stock exchange for ten years from
2007 to 2016. The Data used in this study were collected from Bloomberg database.
The rising significance of non-manufacturing sector (i.e banks) to the world economy
being the center of this focused issue (Merchant and Gaur, 2008). Banks used in the sample
were selected according to data available in the period of 2007-2016 and banks have not
been turned off or merged with other banks during the research period (Table II).

3.2 The study variables

The independent variable (sustainable report) was measured using three disclosure indicators
(environmental disclosure, corporate social disclosure and corporate governance disclosure)
(de Villiers et al., 2017). The dependent variables (bank performance) have been measured
using operational performance (ROA), financial performance (ROE) and market performance
(TQ) (Buallay, 2017; Hamdan et al., 2017; Buallay et al., 2017). Finally, two types of control
variables were utilized in this study; the macroeconomic control variables: in economics-based
integrated report research, endogeneity often appears. Endogeneity consist of three problems:
correlated variables, reverse causality and simultaneity (Nikolaev and van Lent, 2005; Larcker
and Rusticus, 2010). Therefore, we consider macroeconomic specifications as control variables
in order to deal with these issues, where those countries are differed in terms of technological
capacity, intellectual property regimes, economic development and geography (Contractor
et al., 2016). Therefore, our control variables are: gross domestic product (GDP), governance
(GOV). On the other hand, we use bank specific control variables such as: total assets (TA)
(Gaur et al., 2014; Singh et al., 2018) and financial leverage (FLEV ).

3.3 Study model

In order to measure the relationship between sustainability reporting and bank’s
performance; the study estimates the linear model as follows:
Perf itg ¼ b0 þb1 EDitg þb2 CSRDitg þb3 CGDitg þ þ b4 ESGitg þb5 TAitg
þb6 FLEVitg þb7 GDPitg þb8 GOVitg þeitg

Country Listed banks Total observations Country Listed banks Total observations

Austria 7 70 Hungary 1 10
Belgium 6 60 Italy 19 190
Bulgaria 5 50 The Netherlands 4 40
Croatia 12 120 Norway 30 300
Cyprus 2 20 Poland 14 140
Czech Republic 3 30 Portugal 2 20
Denmark 22 220 Romania 3 30
Finland 3 30 Slovakia 6 60
France 17 170 Spain 9 90
Germany 8 80 Sweden 7 70
Greece 8 80 Switzerland 47 470 Table II.
Total observations 2,350 Sample selection
MEQ where Perf: is a continuous variable; the dependent variable is the Banks’ performance
30,1 measured by three models (e.g. ROA model, ROE model and Tobin’s Q model). ROA is the
ratio of net income divided by TA of bank (i), in the period (t), in the country (g). ROE is
the ratio of net income divided by shareholders equity of bank (i), in the period (t), in the
country (g). Tobin’s Q is the ratio of current liabilities plus market value of share capital
divided by TA of bank (i), in the period (t), in the country (g). β0: is the constant and β1-8: is
104 the slope of the controls and independent variables. ED: is a continuous variable; the
independent variable is the disclosure of bank’s energy use, waste, pollution, natural
resource conservation and animal treatment of bank (i), in the period (t), in the country (g).
CSRD: is a continuous variable; the independent variable is the disclosure of the bank’s
business relationships, bank donation, volunteer work, employees’ health and safety of bank
(i), in the period (t), in the country (g). CGD: is a continuous variable; the independent
variable is the disclosure of corporate governance code of bank (i), in the period (t), in the
country (g). ESG: is a continuous variable; the independent variable is the Bloomberg index
which combine the ED, CGD and CSRD of bank (i), in the period (t), in the country (g). TA: is
continues variable, the bank specific control variable, the TA of the bank, for the bank (i), in
the period (t), in the country (g). FLEV: is continues variable, the bank specific control
variable, the degree to which a bank uses fixed-income securities such as debt and preferred
equity of the bank (i), in the period (t), in the country (g). GDP: is a continuous variable, the
macroeconomic control variable, is the GDP of the country, for the bank (i) in the period (t),
in the country (g). GOV: is a continuous variable, the macroeconomic control variable, is the
public governance level of the country, for the bank (i), in the period (t), in the country (g).
ε: random error.

3.4 Model validity

The objective of assessing validity is to see how accurate the relationship between the
measure and underlying trait is trying to measure (Gaur and Gaur, 2009).
Linear regression model was used to test the relationship between the sustainability
reporting and performance. We, therefore, run several tests to check whether data of this
study could meet the conditions of the linearity assumptions.
As presented in Table III, to secure approximation of data to normal distribution,
Shapiro-Wilk parametric test and Kolmogorov-Smirnov non parametric were used. The null
hypothesis of these tests is that the population is normally distributed. Thus, if the p-value is
less than the chosen 0.05 then the null hypothesis is rejected and there is evidence that the
data are not normal. As shown in the table the value for all variables was less than 0.05.
These un-normal distributed data may not influence the credibility of the study because the
size of the sample was big and assuming not distributing the data normally.
However, empirical research that uses time series, like the case of this study, presupposes
stability of these series. Autocorrelation might occur in the model because time series on
which this study is based is non-stationary (Gujarati and Porter, 2003). To check stationarity
of time series, unit root test, which includes the parametric Augmented Dicky-Fuller test
(ADF) and non-parametric test Phillips-Perron test were used. As is presented in Table III,
we can notice that the (ADF) test and (PP) test are statistically significant at the level of
1 percent which meant that the data of time series (2007-2016) were stationary.
As for the strength of the linear model, basically depends on the hypothesis that every
variable from the independent ones is by itself independent. If this condition is not realized,
the linear model will then be inapplicable. It can never be considered good for parameters’
evaluation. To actualize this, collinearity diagnostics standard used incessant tolerance
quotient for every variable of the independent ones. Variance inflation factor (VIF) has to be
found afterwards. This test is the standard that measures the effect of independent
variables. Gujarati and Porter (2003) stated that getting a VIF higher than 10 indicates that
 Normality Collinearity Stationarity Autocorelleation Heteroscedasticity
Shapiro-Wilk/ ADF/
Kolmogorov- Phillips- Durbin Watson Breusch-Pagan Koenker
Variables Labels Measurements Smirnov VIF test Perron test test test

Dependent variables
Operational ROA Net income divided by total assets 0.000 −20.141*** 0.403 0.000 0.000
performance
Financial performance ROE Net income divided by shareholder’s equity 0.000 −18.111*** 0.622 0.000 0.000
Market performance TQ The (Market value of equity + Book value of 0.000 −9.374*** 0.407 0.000 0.000
short-term liabilities)/Book value of assets
Independent variable
Environmental ED Bloomberg index which measure the 0.000 3.034 −6.500*** 0.000 0.000
disclosure disclosure of bank’s energy use, waste,
pollution, natural resource conservation and
animal treatment
Corporate governance CGD Bloomberg index which measure the 0.000 1.242 −2.588*** 0.000 0.000
disclosure disclosure of corporate governance code
Corporate social CSRD Bloomberg index which measure the 0.000 4.941 0.000 0.000
responsibility disclosure of the bank’s business
disclosure relationships, bank donation, volunteer
work, employees’ health and safety
ESG disclosure ESG Bloomberg index which combine the ED, 0.000 2.440 −4.874*** 0.000 0.000
CGD and CSRD
Control variables
Bank specific
Financial leverage FLEV The degree to which a bank uses fixed- 0.000 4.009 −1.008*** 0.000 0.000
income securities
Total assets TA The total assets of the Bank 0.000 2.814 −4.744*** 0.000 0.000
Macroeconomic
GDP GDP The gross domestic product of the country 0.000 3.441 −2.669*** 0.000 0.000
Governance GOV The public governance level of the country 0.000 2.251 −1.821*** 0.000 0.000
Notes: ***Significance at 1 percent level
banking sector
the European

105
Evidence from

Model validity
Table III.
MEQ there is a multicollinearity problem for the independent variable of concern. As presented in
30,1 Table III, it can be noticed that the VIF values for all independent variables are less than
10 which means that we do not have any collinearity problems in the study models.
To test the autocorrelation problem in the study models, we used Durbin Watson (D-W)
test. Table III shows that the D-W values of the models are within the range of 1.5-2.5. This
indicates there is no autocorrelation in this model.
106 Finally, one of the significant assumptions of the regression models is the presence of
Homoskedasticity. We test Heteroskedasticity using (Breusch-Pagan and koenker test).
As shown in Table III, we find that p-value of the three models are more than 0.05 which
indicates admitting the null hypothesis; these models not suffer from actual Heteroskedasticity.

4. Descriptive analysis
In this section, we used the descriptive statistics in order to describe the study variables.
Thus, we first show the mean, maximum, minimum and standard deviation of the variables.
In addition to skewness to measure the lack of symmetry and kurtosis to measure whether
the data are heavy-tailed or light-tailed relative to a normal distribution. Then, we adopt
path analysis to show more advance results.

4.1 Descriptive statistics

As shown in Table IV, the values for asymmetry and kurtosis between −2 and +2 are
considered acceptable in order to prove normal univariate distribution (George, 2011).
The median value is lower than the mean value indicating that the distribution is skewed to
the right (see Table IV ).
The result of the descriptive analysis shows that the mean of governance disclosure has
the highest value followed by the social disclosure while the environmental disclosure
has the lowest disclosure among the banks. This means that many banks positively
encouraged the disclosure corporate governance practices and roles within their reports that
ultimately lead to better performance.

4.2 Path analysis

4.2.1 ESG disclosure and bank specific. 4.2.1.1 ESG disclosure based on bank FLEV. In this
section, we divided the ESG disclosure into two categories; banks with a high level of
leverage and banks with a low level of leverage (see Table V ). The study used path analysis
based on the value of FLEV median to identify the variance between the means of the two
samples t-statistic test was used. The analysis using t-statistic test showed that the three
sustainable report indicators tend to be higher with firms that have high FLEV ratio.
4.2.1.2 ESG disclosure based on bank size. Further analysis, we divided the sustainable
disclosure into two categories; banks with high assets and banks with low assets
(see Table V ). The study used path analysis based on the value of TA median to identify the
variance between the means of the two samples t-statistic test was used. The analysis using
t-statistic test showed that the ESG disclosures indicators tend to be higher with banks that
have more assets.
4.2.2 ESG disclosure and macroeconomics. 4.2.2.1 ESG disclosure based on countries’
GDP. Moreover, the ESG disclosures were divided into two categories; banks located in high
GDP countries and banks located in low GDP countries (see Table VI). The study used path
analysis based on the value of country’s GDP median to identify the variance between the
means of the two samples t-statistic test was used. The analysis using t-statistic test showed
that the governance disclosure tends to be higher with banks locating in high GDP countries.
However, the social disclosure, environmental disclosure and ESG score tend to be higher in
banks that are located in low GDP countries.
 Macroeconomic control
Dependent variables Independent variables Bank specific control variables variables
Environmental Social Governance Financial Total
Variables ROA ROE TQ disclosure disclosure disclosure ESG leverage assets GDP Governance

Mean 0.111 0.182 2.104 25 35 52.3 34.501 17.304 402,441 3,437,444 80.577
Median 0.08 0.091 1.877 21 34.3 51.8 33.3114 15.777 103,414 16,350,001 81.554
Maximum 0.201 0.417 3.443 91 86 85.7 79.314 116.252 3,649,899 18,037,247 100
Minimum 0.001 0.003 1.406 1.7 3.35 14.1 9.677 2.335 1,766 14,785 40.384
SD 10.114 12.205 12.223 17 18.7 11.2 14.225 9.668 636,393 4,389,144 14.555
Skewness 0.401 0.039 0.72 0.5 0.1 −0.2 0.399 0.59 1.3221 1.822 −1.225
Kurtosis 3.224 2.505 2.832 2.8 2.11 3.21 2.307 1.877 1.83 1.665 1.004
banking sector
the European

107
Evidence from

Table IV.
Descriptive analysis
MEQ Financial leverage Bank size
30,1 Mean difference by Mean difference
financial leverage Difference tests by bank size Difference tests
High Low High Low
Variables FLEV FLEV t-statistic p-value asset asset t-statistic p-value

Environmental disclosure 25.184 24.014 0.610 0.544 31.075 19.008 15.204 0.000***
108 Governance disclosure 47.140 46.995 0.520 0.623 56.008 45.114 32.101 0.000***
Social disclosure 31.779 22.063 9.308 0.000*** 37.174 18.882 27.002 0.000***
Table V. ESG disclosure 21.089 16.057 16.138 0.000*** 37.766 14.645 62.225 0.000***
ESG disclosure based Notes: The t-statistic is based on parametric test two-independent sample t-test. ***Significance at
on bank specific 1 percent level

GDP Governance
Mean difference by Mean difference by
financial leverage Difference tests bank size Difference tests
High Low High Low
Variables GDP GDP t-statistic p-value GOV GOV t-statistic p-value

Environmental
disclosure 23.336 26.901 −4.485 0.000*** 26.100 24.361 2.505 0.012***
Governance disclosure 47.636 45.495 7.216 0.000*** 49.002 42.554 21.089 0.000***
Table VI. Social disclosure 20.698 34.052 −17.002 0.000*** 19.325 35.361 −20.003 0.000***
ESG disclosure based ESG disclosure 16.015 23.660 −19.551 0.000*** 16.990 21.001 −11.191 0.000***
on macroeconomics Notes: The t-statistic is based on parametric test two-independent sample t-test. ***Significance at 1 percent
indicators level

4.2.2.2 ESG disclosure and countries’ Governance. At last, the ESG disclosures were divided
into two categories; banks located in high governance countries and banks located in low
governance countries (see Table VI). The study used path analysis based on the value of
country’s governance median to identify the variance between the means of the two samples
t-statistic test was used. The analysis using t-statistic test showed that the environmental
disclosure and governance disclosure tend to be higher with banks located in high
governance countries. However, the social disclosure tends to be better in banks located in
low governance countries.

5. Empirical analysis
5.1 Panel causality tests
To get better results in investigating the relationship between dependent and independent
variables we need to include different methodologies and approaches to data collection and
analysis (Gaur and Kumar, 2017). In this stage we tested heterogeneous or unequal
coefficients of the interaction variable to find the direction of relationship between
sustainable report and performance through answering the question whether the
sustainability reporting enhanced the performance or not?
The null hypothesis states that there is no causal relationship between dependent and
independent variables if the p-value of them is more than 5 percent.
As shown in Table VII, the result shows that Tobin’s Q is Granger cause of ESG since
the p-value less than 5 percent significant level. The result supports the recent
recommendations in some various countries to encourage the sustainable practices as best
practices of market performance.
5.2 Pearson correlation analysis Evidence from
Table VIII shows the direction of relationships among all the variables that were examined the European
by adopting Pearson correlation matrix in order to get more insight before testing the banking sector
hypotheses. The result shows that the correlation coefficients of TQ indicate significant
positive associations at 1 percent level with all ESG indicators. However, the ROA is
correlated with the governance disclosure at 5 percent. Finally, the ROE is correlated with
social and environmental disclosure at 1 percent. In total, the ESG is highly correlated with 109
the dependent variables which could support our study’s hypothesis. As expected, the result
implies that banks with greater sustainable report disclosure have better performance.

5.3 Regression discussion and findings

Our study can only assume a correlation between error and independent variables of the
study sample. “Hausman Test” confirmed this where a null hypothesis assumes that
capabilities of fixed-effect approach (FE) and random-effects approach (EF) are the same,
but if a null hypothesis is accepted then this indicates that random-effect approach is
appropriate, and it is therefore preferable to use random-effect approach. “Hauseman”
“χ2” model shown in Table IX is statistically insignificant as p-value is more than 5 percent,
which mean that capabilities of random-effect model (RE) are best representing the
relationship confirming our assumption that ε,_i and Xs are correlated.
We create this model in order to answer the question: could the sustainable report be a
proxy for better performance? In other words, is it possible that ESG enhanced operational,
financial and market performance?
The results reveal that ROA, ROE and TQ regression models have high statistical
significance, as p-value represents the probability of concluding that there is a difference in
the sample when no true difference exists (Gaur and Gaur, 2009). In our case, the p-value
of F-test is less than 5 percent (0.000) which present high explanatory power of the
three models.
As shown in Table IX, the slop coefficient of ESG for ROA, ROE and TQ indicates that the
impact of sustainability reporting is significant and has a positive impact on the performance
as evident from the coefficient and p-value is less than 1 percent (0.001, 0.000 and 0.004).

Null hypothesis F-test Probability Remark

ESG does not Granger cause ROA 0.221 0.701 Accept – no causality
ESG does not Granger cause ROE 4.505 0.414 Accept – no causality Table VII.
ESG does not Granger cause TQ 0.600 0.004 Reject – causality Panel causality test

Variables ROA ROE TQ ED CSRD CGD ESG

ROA 1
ROE 0.112 1
TQ 0.647 0.144 1
ED 0.332 0.212*** 0.601*** 1
CSRD 0.609 0.105*** 0.332*** 0.525*** 1
CGD 0.042** 0.115 0.010*** 0.663*** 0.405*** 1
ESG 0.802*** 0.499*** 0.677*** 0.901*** 0.607*** 0.912*** 1
Notes: ROA, Return on Assets; ROE, Return on Equity; TQ, Tobin’s Q; ED, Environmental Disclosure;
CSRD, Corporate Social Responsibility Disclosure; CGD, Corporate Governance Disclosure; ESG, Table VIII.
Environmental, Social and Governance. *,**Significance at 5 and 1 percent levels, respectively Correlation matrix
MEQ ROA model ROE model TQ model
30,1 Variables label β t-statistic β t-statistic β t-statistic

Independent variable
Environmental disclosure ED 0.0441.222 0.003 0.146*** 0.146 5.233***
0.101 0.008 0.000
Corporate social responsibility CSRD −0.120 −2.942*** 0.211 4.342*** 0.099 2.042***
110 disclosure 0.007 0.000 0.006
Corporate governance disclosure CGD −0.279 −1.017*** −0.401 −1.652*** 0.345 1.830
0.002 0.005 0.082
ESG ESG 0.280 1.019*** 0.301 1.611*** 0.344 1.827***
0.001 0.000 0.004
Control variables
Bank specific
Financial leverage FLEV −0.078 −3.148*** −0.032 −2.101** −0.033 −2.534**
0.000 0.033 0.012
Total assets TA 0.320 13.025*** 0.331 20.301*** 0.359 29.275***
0.000 0.000 0.000
Macroeconomic
GDP GDP −0.149 −6.454*** −0.470 −28.545*** −0.101 −7.122***
0.000 0.000 0.000
Governance GOV 0.129 5.333*** −0.079 −4.926*** 0.246 17.505***
0.000 0.000 0.000
R2 0.292 0.451 0.310
Adj. R2 0.280 0.455 0.312
F-statistic 104.414 302.116 385.005
p-value 0.000 0.000 0.000
Table IX. Hausman test (χ2) 3.011 2.077 2.265
Regression models p-value (χ2) 0.216 0.310 0.129
(random effect) Notes: **,***Significance at 5 and 1 percent levels, respectively

Therefore, we accept the null hypothesis (H1-H3). Disclose more information about ESG
enhance company’s performance.
Although the ESG results found significant positive impact on the performance, splitting
the ESG indicators could give us another direction in the relationship with the performance.
First, the environmental disclosure found to be positively associated with the ROE and TQ.
This evidences that bank’s financial and market profitability have been created more by
published information about environmental issues. Based on these results, banks in European
Union countries increase their ROE by concentrating more on the environmental disclosure.
This means, the stakeholders in those countries are aware and consider the environmental
practices in their investment decisions as a main driver for better asset efficiency. This has
brought wealth to financial sector of society and led the firms to concentrate significantly on
further investment in their physical and financial assets. Also, Tobin’s Q results indicate that
disclosure of environmental practices is significantly contributed to a physical asset’s market
value and its replacement value. Considering this result, we believe that environmental
disclosure has a significance and usefulness in European Union countries as the nexus
between financial markets and markets for goods and services.
Second, we found that the corporate social responsibility disclosure has negative
relationship with the three performance indicators. To clarify that, we believed that CSR
develops because executive management and boards of directors work in social policies for
their own benefit. If so, then three possible outcomes are that these policies result in costs to
the banks, costs that are borne by stakeholders which lower the market value (TQ), the
equity (ROE) and the efficiency of assets (ROA).
 At last, the corporate governance disclosure found to negatively affects the financial and Evidence from
operational performance. However, disclose more information about the governance the European
practices may enhance and positively affect the Tobin’s Q. This means that governance banking sector
disclosure decreases the asset efficiency (ROA) and equity return (ROE). Although this
finding of governance is quite different from other recent literature, it is in line with some
studies (Core et al., 2006; Gompers et al., 2003).
For the bank specific control variables, bank size found to be positively significant with 111
ROA, ROE and TQ models. As more tangible assets in the banks it positively affects the
performance. In theory large firms may perform better, as they have more resources and
higher efficiency. For the FLEV, we found that the FLEV has negative and significant
relationship with the performance, i.e., more the FLEV lower is the performance.
Popli, Akbar, Kumar and Gaur (2017) and Popli, Ladkani and Gaur (2017) stated that firms
leverage can be used as an indicator to attain superior long-term performance.
Finally, after testing the effect of macroeconomic control variables, we found that GDP
negatively controls the three models. Moreover, the public governance has significant
positive relationship with the operational and market models while the financial model was
found negatively affected by the governance. This means the greater public governance in
the country, the lower market value of assets in the firms locating in this country.

6. Conclusion, recommendations and future research

This study considers the level of ESG in the banks listed on the European Union countries stock
exchange to investigates the relationship between sustainability reporting and performance.
The data collected are pooled data from Bloomberg database during the period 2007-2016. This
study examined 235 banks for ten years to ends up with 2,350 observations.
The independent variable is (social, environmental and governance disclosure).
The dependent variables are performance indicators (ROA, ROE and TQ). Two types of
control variables utilized in this study; the macroeconomic control variables; GDP, (GOV ).
And the Bank specific control variables; TA and FLEV.
The finding of descriptive analysis shows that ESG tends to be higher with banks that
have high FLEV and high assets. Further, the governance disclosure is better in banks
located in high GDP and high governance. However, the social and environmental
disclosure is better in banks located in low GDP countries and low governance countries.
Moving to Empirical results, the causality test finding shows that Tobin’s Q is Granger
cause of ESG. Moreover, regression model was incorporated under random effect; Although
the ESG results found significant positive impact on the performance, splitting these
indicators may vary when measure individually; the environmental disclosure found to
positively affects the ROE and TQ. Whereas, the corporate social responsibility disclosure is
negatively affect the three models. Last but not the least, the corporate governance disclosure
found to negatively affects the financial and operational performance (ROA and ROE).
We suggest the European banks to focus more on sustainability reporting to assure more
transparency of long-term economic situation and non-financial information.
In European Union countries, it is clearly noted that different governmental authorities
are moving since years ago to establish and implement sustainability reporting in order to
strengthen the relations with societies and business communities and to move toward
sustainability. However, the laws associated with the sustainable disclosure is weak,
therefore, we recommend the countries regulator to pay more attention to ESG disclosure to
assure more transparency in the disclosure.
Added to that, the stakeholders such as investors, shareholders, creditors and debtors
recommended to increase their knowledge about the term of sustainable report and its
importance in the business to make better investment choices. Furthermore, we suggest that
organizers like central bank, external auditors and stock exchange organizer to take the
MEQ sustainability reporting into consideration to assure reliable financial information to all
30,1 business parties. More importantly, the financial authority in European countries should
have a clear and mandatory law associated with sustainability reporting.
Finally, we suggest that future research has to be undertaken in sustainable reports and
how other factors are affecting the disclosure of sustainable reports. For example, the effect
of audit committee characteristics on ESG disclosure, the relationship between earning
112 management and ESG disclosure and the effect of corporate governance practices on
ESG disclosure.

References
Adams, C. (2017), “Understanding integrated reporting: the concise guide to integrated thinking and
the future of corporate reporting”, Routledge.
Albuquerque, R., Durnev, A. and Koskinen, Y. (2012), “Corporate social responsibility and asset pricing
in industry equilibrium”, SSRN 1961971.
Asian Sustainability Rating (2011), Research Methodology, Asian Sustainability Rating Ltd,
Berkhamsted, available at: www.asiansr.com/Methodology.html
Baldini, M., Dal Maso, L., Liberatore, G., Mazzi, F. and Terzani, S. (2016), “Role of country- and
firm-level determinants in environmental, social, and governance disclosure”, Journal of
Business Ethics, pp. 1-20, available at: https://doi.org/10.1007/s10551-016-3139-1
Barth, M.E., Cahan, S.F., Chen, L. and Venter, E.R. (2016), “The economic consequences associated
with integrated report quality: early evidence from a mandatory setting”, unpublished working
paper, University of Pretoria.
Buallay, A., Hamdan, A. and Zureigat, Q. (2017), “Corporate governance and firm performance:
evidence from Saudi Arabia”, Australasian Accounting, Business and Finance Journal, Vol. 11
No. 1, pp. 78-98.
Buallay, A.M. (2017), “The relationship between intellectual capital and firm performance”, Corporate
Governance and Organizational Behavior Review, Vol. 1 No. 1, pp. 32-41, available at: http://doi.
org/10.22495/cgobr_v1_i1_p4
Contractor, F., Yang, Y. and Gaur, A.S. (2016), “Firm-specific intangible assets and subsidiary
profitability: the moderating role of distance, ownership strategy and subsidiary experience”,
Journal of World Business, Vol. 51 No. 6, pp. 950-964.
Core, J.E., Guay, W.R. and Rusticus, T.O. (2006), “Does weak governance cause weak stock returns? An
examination of firm operating performance and investors’ expectations”, The Journal of Finance,
Vol. 61 No. 2, pp. 655-687.
de Villiers, C., Venter, E.R. and Hsiao, P.C.K. (2017), “Integrated reporting: background, measurement
issues, approaches and an agenda for future research”, Accounting & Finance, Vol. 57 No. 4,
pp. 937-959.
DJSI (2011), available at: www.sustainability-indices.com/images/110908-djsi-review-2011.pdf
Duuren, E., Plantinga, A. and Scholtens, B. (2016), “ESG integration and the investment management
process: fundamental investing reinvented”, Journal of Business Ethics, Vol. 138 No. 3,
pp. 525-533.
Eccles, R.G. and Saltzman, D. (2011), “Achieving sustainability through integrated reporting”, Stanford
Social Innovation Review, Vol. 59.
Eccles, R.G., Ioannou, I. and Serafeim, G. (2012), “The impact of a corporate culture of sustainability on
corporate behavior and performance”, Working Paper Series No. 17950, National Bureau of
Economic Research.
Eccles, R.G., Krzus, M.P. and Ribot, S. (2015), “Models of best practice in integrated reporting 2015”,
Journal of Applied Corporate Finance, Vol. 27 No. 2, pp. 103-115.
EIRIS (2011), “EIRIS organisation, EIRIS foundation and ethical investment research services”,
London, available at: www.eiris.org/about_us.html
El Ghoul, S., Guedhami, O., Kwok, C.C. and Mishra, D.R. (2011), “Does corporate social responsibility Evidence from
affect the cost of capital?”, Journal of Banking & Finance, Vol. 35 No. 9, pp. 2388-2406. the European
Elzahar, H., Hussainey, K., Mazzi, F. and Tsalavoutas, I. (2015), “Economic consequences of key banking sector
performance indicators' disclosure quality”, International Review of Financial Analysis, Vol. 39,
pp. 96-112.
Financial Times Stock Exchange (2011), “Good index series inclusion criteria”, FTSE the Index
Company, London, available at: www.ftse.com/Indices/FTSE4Good_Index_Series/Downloads/ 113
F4G_Criteria.pdf
Friedman, M. (1962), “Capitalism and freedom: with the assistance of Rose D. Friedman”, University of
Chicago Press.
Gardberg, N.A. and Fombrun, C.J. (2006), “Corporate citizenship: creating intangible assets across
institutional environments”, Academy of Management Review, Vol. 31 No. 2, pp. 329-346.
Garriga, E. and Melé, D. (2004), “Corporate social responsibility theories: mapping the territory”,
Journal of Business Ethics, Vol. 53 Nos 1-2, pp. 51-71.
Gaur, A. and Kumar, M. (2017), “A systematic approach to conducting review studies: an assessment of
content analysis in 25 years of IB research”, Journal of World Business, Vol. 53 No. 2, pp. 280-289.
Gaur, A.S. and Gaur, S.S. (2009), Statistical Methods for Practice and Research: A Guide to Data Analysis
Using SPSS, 2nd ed., Sage, New Delhi.
Gaur, A.S., Kumar, V. and Singh, D. (2014), “Institutions, resources, and internationalization of
emerging economy firms”, Journal of World Business, Vol. 49 No. 1, pp. 12-20.
Gaur, S.S., Vasudevan, H. and Gaur, A.S. (2011), “Market orientation and manufacturing performance
of Indian SMEs: moderating role of firm resources and environmental factors”, European
Journal of Marketing, Vol. 45 Nos 7/8, pp. 1172-1193, doi: 10.1108/03090561111137660.
George, D. (2011), SPSS for Windows Step by Step: A Simple Study Guide and Reference, 17.0 update,
10/e, Pearson Education India.
Gompers, P., Ishii, J. and Metrick, A. (2003), “Corporate governance and equity prices”, The Quarterly
Journal of Economics, Vol. 118 No. 1, pp. 107-156.
Gujarati, D.N. and Porter, D.C. (2003), Basic Econometrics, 4th ed., McGraw-Hill, New York, NY.
Hamdan, A.M., Buallay, A.M. and Alareeni, B.A. (2017), “The moderating role of corporate governance on
the relationship between intellectual capital efficiency and firm’s performance: evidence from
Saudi Arabia”, International Journal of Learning and Intellectual Capital, Vol. 14 No. 4, pp. 295-318.
Hillman, A.J. and Keim, G.D. (2001), “Shareholder value, stakeholder management, and social criteria:
what’s the bottom line?”, Strategic Management Journal, Vol. 22 No. 2, pp. 125-139.
Hong, H. and Kacperczyk, M. (2009), “The price of sin: the effects of social norms on markets”, Journal
of Financial Economics, Vol. 93 No. 1, pp. 15-36.
Hwang, P. and Gaur, A.S. (2009), “Organizational efficiency, firm capabilities, and economic
organization of MNEs”, Multinational Business Review, Vol. 17 No. 3, pp. 143-162.
Ioannou, I. and Serafeim, G. (2017), “The consequences of mandatory corporate sustainability
reporting”.
Jensen, J.C. and Berg, N. (2012), “Determinants of traditional sustainability reporting versus integrated
reporting: an institutionalist approach”, Business Strategy and the Environment, Vol. 21 No. 5,
pp. 299-316.
Krzus, M.P. (2011), “Integrated reporting: if not now, when?”, Zeitschrift für Internationale
Rechnungslegung, Vol. 6, pp. 271-276.
Larcker, D.F. and Rusticus, T.O. (2010), “On the use of instrumental variables in accounting research”,
Journal of Accounting and Economics, Vol. 49 No. 3, pp. 186-205.
Lee Brown, D., Guidry, R.P. and Patten, D.M. (2009), “Sustainability reporting and perceptions of
corporate reputation: an analysis using fortune”, Sustainability, Environmental Performance and
Disclosures, Vol. 4, Emerald Group Publishing, pp. 83-104.
MEQ Li, S. and Gaur, A. (2014), “Financial giants and moral pygmies? Multinational corporations and
30,1 human rights in emerging markets”, International Journal of Emerging Markets, Vol. 9 No. 1,
pp. 11-32.
Li, Y., Gong, M., Zhang, X.Y. and Koh, L. (2017), “The impact of environmental, social, and governance
disclosure on firm value: the role of CEO power”, The British Accounting Review, Vol. 50 No. 1,
pp. 60-75.
114 Mackey, A., Mackey, T.B. and Barney, J.B. (2007), “Corporate social responsibility and firm
performance: investor preferences and corporate strategies”, Academy of Management Review,
Vol. 32 No. 3, pp. 817-835.
Margolis, J.D., Elfenbein, H.A. and Walsh, J.P. (2007), “Does it pay to be good? A meta-analysis and
redirection of research on the relationship between corporate social and financial performance”,
Ann Arbor, MI, available at: https://doi.org/10.2139/ssrn.1866371
Merchant, H. and Gaur, A. (2008), “Opening the ‘non-manufacturing’ envelope: the next big enterprise
for international business research”, MIR: Management International Review, Vol. 48 No. 4,
pp. 379-396, doi: 10.1007/s11575-008-0022-z.
MSCI (2011), “ESG research methodology”, MSCI Inc., New York, NY, available at: www.msci.com/
products/indices/thematic/esg/esg_research_methodology.html
Nikolaev, V. and van Lent, L. (2005), “The endogeneity bias in the relation between cost-of-debt capital
and corporate disclosure policy”, European Accounting Review, Vol. 14 No. 4, pp. 677-724.
Popli, M., Ladkani, R.M. and Gaur, A.S. (2017), “Business group affiliation and post-acquisition
performance: an extended resource-based view”, Journal of Business Research, Vol. 81, pp. 21-30.
Popli, M., Akbar, M., Kumar, V. and Gaur, A. (2017), “Performance impact of temporal strategic fit:
entrainment of internationalization with pro-market reforms”, Global Strategy Journal, Vol. 7
No. 4, pp. 354-374.
Porter, M.E. (1991), “America’s green strategy”, Scientific American, April, p. 96.
Reverte, C. (2009), “Determinants of corporate social responsibility disclosure ratings by Spanish listed
firms”, Journal of Business Ethics, Vol. 88 No. 2, pp. 351-366.
Sharfman, M.P. and Fernando, C.S. (2008), “Environmental risk management and the cost of capital”,
Strategic Management Journal, Vol. 29 No. 6, pp. 569-592.
Simnett, R., Vanstraelen, A. and Chua, W.F. (2009), “Assurance on sustainability reports:
an international comparison”, The Accounting Review, Vol. 84 No. 3, pp. 937-967.
Singh, D., Pattnaik, C., Gaur, A.S. and Ketencioglu, E. (2018), “Corporate expansion during pro-market
reforms in emerging markets: the contingent value of group affiliation and diversification”,
Journal of Business Research, Vol. 82, pp. 220-229.
Singh, D.A. and Gaur, A.S. (2009), “Business group affiliation, firm governance, and firm performance:
evidence from China and India”, Corporate Governance: An International Review, Vol. 17 No. 4,
pp. 411-425.
Singh, D.A. and Gaur, A.S. (2013), “Governance structure, innovation and internationalization: evidence
from India”, Journal of International Management, Vol. 19 No. 3, pp. 300-309.
Statman, M. and Glushkov, D. (2009), “The wages of social responsibility”, Financial Analysts Journal,
Vol. 65 No. 4, pp. 33-46.
Steyn, M. (2014), “Organisational benefits and implementation challenges of mandatory integrated
reporting: perspectives of senior executives at South African listed companies”, Sustainability
Accounting, Management and Policy Journal, Vol. 5 No. 4, pp. 476-503.
Sustainable Stock Exchanges (SSE) (2015), “Sustainable stock exchanges initiative: model guidance on
reporting ESG information to investors”, available at: www.sseinitiative.org/wpcontent/
uploads/2015/09/SSE-Model-Guidance-on-Reporting-ESG.pdf
Suzuki, H. and Levy, R. (2010), “ESG USA 2010: global trends and US sustainable investing”,
Responsible Investor, London, available at: www.responsibleinvestor.com/images/uploads/
reports/ESG_USA_2010.pdf
Trucost (2013), “Our methodology”, Trucost, London, available at: www.trucost.com/methodology Evidence from
United Nations Environment Programme (2011), “Understanding corporate sustainability disclosure the European
requests”, UNEP, November 2017, available at: www.unepfi.org/fileadmin/documents/if_you_ banking sector
ask_us.pdf
Waddock, S.A. and Graves, S.B. (1997), “Finding the link between stakeholder relations and quality of
management”, Journal of Investing, Vol. 6 No. 4, pp. 20-24.
Wulf, I., Niemöller, J. and Rentzsch, N. (2014), “Development toward integrated reporting, and its 115
impact on corporate governance: a two-dimensional approach to accounting with reference to
the German two-tier system”, Journal of Management Control, Vol. 25 No. 2, pp. 135-164.
Zivin, J.G. and Small, A. (2005), “A Modigliani-Miller theory of altruistic corporate social
responsibility”, The BE Journal of Economic Analysis & Policy, Vol. 5 No. 1.

Further reading
Friedman, M. (2007), “The Social responsibility of business is to increase its profits”, in Zimmerli, W.C.,
Holzinger, M. and Richter, K. (Eds), Corporate Ethics and Corporate Governance, Springer, Berlin
and Heidelberg.
Hrebenciuc, A. (2017), “Banking union framework and the stability of the European banking sector”,
Theoretical and Applied Economics, Vol. 24 No. 1, pp. 291-298.
Indexes, D.J.S. (2011), Dow Jones Sustainability World Indexes Guide Book, Dow Jones Indexes.
International Integrated Reporting Committee (IIRC) (2013), “The international framework”,
available at: https://integratedreporting.org/wp-content/uploads/2013/12/13-12-08-THE-
INTERNATIONAL-IR-FRAMEWORK-2-1.pdf
Judge, W.Q., Gaur, A. and Muller-Kahle, M.I. (2010), “Antecedents of shareholder activism in target
firms: evidence from a multi-country study”, Corporate Governance: An International Review,
Vol. 18 No. 4, pp. 258-273.

Corresponding author
Amina Buallay can be contacted at: [email protected]

For instructions on how to order reprints of this article, please visit our website:
www.emeraldgrouppublishing.com/licensing/reprints.htm
Or contact us for further details: [email protected]