Impact of Sustainability Reporting on Firm Performance

ABSTRACT

This study looks at how Sustainability Reporting affects Firm Performance, focusing on listed firms in Nigeria. It uses Environmental, Social, and Governance (ESG) disclosures to measure sustainability reporting, with Profit after Tax (PAT) as the measure of financial performance, and firm size as a control variable. The study analyzed data from thirteen (13) firms listed in the Nigerian Exchange Group (NGX) from 2013 to 2022. These firms include four (4) in the natural resources sector and nine (9) in the oil and gas sector. The study tests three hypotheses using a panel regression model. The findings show that environmental disclosure has a positive and significant impact on financial performance. Social and governance disclosures also have positive impacts, but these were not significant. The study therefore concludes that all three types of disclosures are important for financial performance in Nigeria. However, environmental disclosures are most important. Based on these findings, the study recommends that companies should increase their sustainability reporting, especially focusing on environmental activities in their annual reports, as this has been shown to improve performance.