Factors influencing the adoption of SDG reporting by large African and Asian companies

Abstract

This article aims to investigate the adoption of the Sustainable Development Goals (SDGs) by large companies in low- and middle-income countries in Asia and Africa, and the company characteristics that influence them to undertake such new sustainability reporting practices. Logistic regression analyses were applied to combine the data extracted from the Global Reporting Initiative’s Sustainability Disclosure Database and the Orbis database from Bureau van Dijk. The empirical results indicate that characteristics like the type of company, its economic performance and its engagement in voluntary sustainability programmes and external assurance are positively related to the adoption of SDG reporting. The results also show that some corporate, organizational and performance characteristics increase companies’ likelihood to adopt SDG reporting. Drawing on agency theory and legitimacy theory perspectives, this article contributes to the academic and practical understanding of factors influencing the adoption of SDG reporting by large companies in Asia and Africa’s low- and middle-income countries.

Sustainability reporting in Africa: A systematic review and agenda for future research

“…However, the empirical evidence is rather mixed. A vast majority of the studies established a positive relationship between gender diversity and sustainability and SDGs reporting (Buallay et al, 2022;Cicchiello et al, 2021;Gir on et al, 2021Gir on et al, , 2022Githaiga & Kosgei, 2022;Injeni et al, 2021;Kazemikhasragh et al, 2021;Kilincarslan et al, 2020;Olayinka, 2022). Interestingly, this relationship can be stronger when female representation on board is between 22% and 50% but may become inverse if it's above 50% (Githaiga & Kosgei, 2022).…”

“…Board age is likewise linked with sustainability adoption in Africa; however, the finding is mixed. Specifically, Kazemikhasragh et al (2021) found that younger directors are more prone to adopt SDGs reporting. Contrarily, Girón et al (2021) reported that the age of directors does not influence sustainability adoption.…”

“…The firm industry type is the most frequently examined firm characteristic that influences sustainability reporting in Africa, but the empirical finding is mixed. For instance, some studies reported that firms operating in sectors characterized by higher social and environmental impacts (e.g., manufacturing, chemical, energy, construction, tourism, and mining) are more likely to address sustainability issues and SDGs in their reporting to avoid negative market reactions (Al Farooque & Ahulu, 2017; Bowrin, 2018; Del Mar Alonso‐Almeida et al, 2014; Girón et al, 2021; Injeni et al, 2021; Kazemikhasragh et al, 2021; Lemma et al, 2019; Masoud & Vij, 2021; Ofoegbu et al, 2018; Oppong, 2022; Wachira et al, 2020). Contrarily, other studies found that belonging to these industries has no significant impact on sustainability adoption (Agyei & Yankey, 2019; Iredele, 2020).…”

“…Nevertheless, the results are equally inconsistent. For example, some studies found a positive effect of firm profitability, financial leverage, and firm revenue growth on the adoption of sustainability and SDGs reporting (Chakroun et al, 2017; Cordova et al, 2020; Haladu & Bin‐Nashwan, 2022; Kazemikhasragh et al, 2021; Mathuva et al, 2017; Tilt et al, 2021) and the extent of the disclosure (Chijoke‐Mgbame & Mgbame, 2018). However, this relationship is moderated by environmental policy administrators (Haladu & Bin‐Nashwan, 2022).…”

“…Firm size is the third commonly examined firm characteristic associated with sustainability disclosure in Africa, however, the empirical results are equally mixed. For example, the majority of the studies found evidence of a positive impact of firm size on SDGs and sustainability reporting (Agyei & Yankey, 2019; Chijoke‐Mgbame & Mgbame, 2018; Coetzee & van Staden, 2011; Cordova et al, 2020; Iredele, 2020; Kazemikhasragh et al, 2021; Masoud & Vij, 2021; Mathuva et al, 2017; Welbeck, 2017). Specifically, the literature assumes that bigger firms engage more in sustainability disclosure than smaller firms (Masoud & Vij, 2021) because they are more visible and well‐known among market participants.…”