Corporate Sustainability Performance and Financial Performance: Empirical Evidence from Japan and India

Abstract

Purpose The purpose of this article is to explore the disclosure of corporate sustainability (CS) practices and to examine the association between sustainability performance and financial performance in Asian context considering firms from India and Japan. Design/methodology/approach The present study is based on secondary data collected from annual reports and CS reports of 28 and 35 listed non-financial firms from India and Japan from 2009 to 2014. Content analysis (binary coding system) is employed to calculate the sustainability disclosure score based on Global Reporting Initiatives (GRI) framework. Market-to-book ratio is used to measure the financial performance. These scores are further used to examine the impact of CS performance on financial performance employing both the panel data model and logit regression model. Findings The study finds that the average level of disclosure is more in case of Japanese firm as compared to Indian firms. Using both the regression model, the study finds the influence of CS performance on financial performance is positive and significant for both the nations. However, the influence of CS performance is more in case of Japan than that of India. Moreover, the study also reveals that environmental factor is more dominating in influencing the financial performance in Japan. Whereas, in India, it is the social factor that dominates the financial performance. Originality/value It is the first comprehensive study in Asia analyzing the CS practices using both the panel data regression model and logit regression model.

Impact of Environmental Performance on Financial Performance: Empirical Evidence from Indian Banking Sector

“…Accordingly, Haninun et al (2015); Stefan & Paul (2008); King & Lenox (2001); Konar & Cohen (2001); Russo & Fouts (1997) observed a liaison between environmental performance and financial performance and found that it pays to be green. Laskar et al (2017) using a sample of 28 listed non-financial firms from India and 35 from Japan examined the alliance amid sustainability performance and financial performance. Using regression model, study found positive significant impact of sustainability performance on financial performance for both the nations.…”

“…For this research, environmental performance is employed as independent variable (Haninun et al, 2018;Laskar et al, 2017;Manrique & Marti-Ballester, 2017;Chang, 2015;Nakao et al, 2007). To measure environmental performance, variables viz.-a-viz.…”

“…compliance, e-waste, emissions, energy, material, products & services and water have been selected. Environmental variables selected are based on GRI G4 guidelines (Laskar et al, 2017;Malarvizhi & Matta, 2016;Chang, 2015) for financial sector. GRI indicators attempt to standardize and harmonize reporting practices and are being employed widely in research (Munoz et al, 2015).…”

“…GRI indicators attempt to standardize and harmonize reporting practices and are being employed widely in research (Munoz et al, 2015). Furthermore, content analysis has been applied by classifying and scrutinizing the content of texts (Bayoud et al, 2012) to extract information about environmental performance/ environmental related disclosures by sample banks (Chowdhury, 2018;Laskar et al, 2017;Malarvizhi & Matta, 2016;Rajput et al, 2013;Singal, 2013). Value "1" has been assigned if information indicates that bank has performed some activity regarding the variable coded and "0" is assigned if no activity related with the variable has been disclosed by the bank.…”

Effective Green Alliances: An analysis of how environmental nongovernmental organizations affect corporate sustainability programs

“…Standardization frameworks provide confidence that reports are auditable when reports claim to adhere to a certain standard. The GRI reporting framework, recognized as the most common standard for corporate sustainability reporting, is increasingly espoused by corporations headquartered in developing and developed countries alike, but the activity levels of different industries are unalike due to the engagement activities being different themselves (Laskar, Chakraborty, & Maji, ). As the most utilized initiative in the field of corporate sustainability reporting, the GRI coins the term “external assurance” for an array of approaches to evaluate reporting regarding sustainable development (Sukhonos & Makarenko, ).…”