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Concept Paper Approval Sheet

The Impact of Sustainability Reporting on Selected Companies’ Financial Performance: Analysis

of Sustainability Report for year 2011-2017
Aquino, Myka Patricia L. Jimenez, Bonnard Jomari E.
Dimaapi, Arrianne Zeanna R. Resurreccion, Diandra Mae A

Evaluator 1
Approved Disapproved

Evaluator 2
Approved Disapproved

Evaluator 3
Approved Disapproved
Title of the Proposed Study:
The Impact of Sustainability Reporting on Selected Companies’ Financial Performance

Area of Study:
Sustainability Accounting, Accounting standards, Sustainability report, Sustainability report disclosure

Background of the Study:

According to Mangangey and Sadashiv (2010), it is becoming more evident that businesses that behave in
an environmentally, socially and ethically responsible manner improve not only the sustainability of the
environment but their very own sustainability. ​The operations of the different companies have been continuously
contributing to the change of the world’s environment. Some of the well-known companies turn to non-financial
disclosure regulations as a tool to increase their corporate transparency about social and environmental issues and
sustainability reporting ​allows companies to make profitable and wise decisions that leads to sustainable businesses​.
In the Philippines, corporate sustainability has also been growing steadily as evidenced by the increasing
number of companies now aligning corporate social responsibility (CSR) particularly sustainability in its strategic
components. ​Even in the absence of a regulatory requirement in the Philippines, over 10% of publicly-listed
companies (PLCs) have embarked on sustainability reporting. Sustainability reporting requires the commitment of
significant resources and this necessitates a periodic evaluation not only to identify what needs to be improved but
also to ensure that resources invested in these reports derive optimal benefits for the organization (Hohnen & Potts,
2007) .
Financial accounting for an organisation’s performance is a mandatory requirement whereas sustainability
reporting is at the moment a voluntary activity. However, organisations are rapidly reporting aspects of their social
and environmental performance in order to gain competitive advantage and thus secure the future of the
organisation. According to Bouten and Hoozée, they have investigated how environment-related management
accounting practices and environmental reporting may interact in the process of responding to disturbances of the
natural environment. This demonstrates that sustainability reporting is the way forward and will likely become a
mainstream business practice in the country.

Statement of the Problem:

1. What is sustainability reporting and its effect on selected companies’ financial performance?
2. What is the impact of each sustainability report component (economic, social, and environmental) on the
financial performance of the firm?
Objectives of the Study:
1. To understand sustainability reporting and determine its effect on selected companies’ financial
2. To analyze separately the impact of each sustainability report component (economic, social, and
environmental) on the financial performance of the firm.

H01: The number of overall sustainability disclosures in the GRI Index that companies submit is related with the
company’s performance.
H02: The number of economic performance indicator disclosures in the GRI index that companies submit is
related with the company’s performance.
H03: The number of environmental performance indicator disclosures in the GRI index that companies submit is
related with the company’s performance.
H04:The number of social performance indicator disclosures in the GRI index that companies submit is related
with the company’s performance.

Literature Review:
(1) Aggarwal, P.. (2013).Impact of Sustainability Performance of Company on its Financial Performance: A
Study of Listed Indian Companies – The article discussed whether sustainable companies are more
profitable and examined the impact of sustainability rating of company on its financial performance in an
Indian context using secondary data. This can be used as a guide for analyzing the sustainability reporting
practices of companies and how they impact the performance of a company in long run and in short run
because it provides data for the study of the same theoretical framework.

(2) Jamali, D., Mezher, T. & Bitar, H. (2006). Corporate social responsibility and the challenge of triple bottom
line integration: insights from the Lebanese context – According to this article, the findings suggest that
organisations in a developing country context report challenges in maintaining a sustainable performance
on the three dimensions, respectively the Triple Bottom Line (TBL) integration. This literature will help
gain information about TBL as a systematic approach to managing the complete set of a company’s
responsibilities, this term is used to refer to a framework for measuring and reporting corporate
performance against economic, social and environmental parameters.

(3) Ogundare, E.A (2013). The Impact of Sustainability Reporting on Organisational Performance – The
Malaysia Experience - In this article, the study is about embedding sustainability reporting culture into
organisational activities and whether it can impact significantly on an organization's performance. This
article is useful for determining the effect of overall sustainability reporting and the use of individual
performance indicators including economic, social and environmental disclosures to the performance of

The study to be used as a basis is the thesis work of Tia Mare L. Ebdane entitled, The Impact Of
Sustainability Reporting On Company Performance: The Philippine Perspective. Based on the findings of three
sustainable dimensions (economic, social and environmental), results showed that control variables like company
age and size when considered, impacts the company’s performance. To explore it further, a quantitative research
featuring the same thesis will be applied in The Impact of Sustainability Reporting on Selected Companies’
Financial Performance. The required data would be collected from the selected companies published sustainability
reports from 2013-2017.


There are three major theories, namely, Legitimacy Theory, Stakeholder Theory and Agency Theory,
which suggest that companies should be sustainable and should incorporate sustainability in their core strategic
goals. The companies should disclose their sustainability performance in a proper sustainability report. These
theories primarily suggest positive relationship between corporate sustainability and company performance.

● Stakeholders Theory
Apart from issues relating to the attempt to appear legitimate, another view reflected in the
literature is that organisations will respond to the demands of the stakeholder groups that control resources
required for their operations (i.e. powerful or influential stakeholders), and will tend to ignore the concerns
of the groups without power (Belal & Owen 2007; Deegan & Blomquist 2006). Satisfying the implicit
expectations of stakeholders improves a company’s reputation to citizens in a way that has a positive effect
on its financial performance attracting the interest of investors and other stakeholders’ bodies (Brammer
and Pavalin, 2006; Weber et al., 2008), whilst disappointing stakeholders may have negative consequences
on the financial performance (Makni et al., 2009; Preston and O’Bannon, 1997).
● Legitimacy Theory
Legitimacy theory posits that the legitimacy of a business entity to operate in society depends on
an implicit social contract between the business entity and society. Companies can lose their license to
operate in society by breaching society’s norms and expectations. Accordingly, legitimacy theory predicts
that companies adopt environmental and social responsibility reporting to legitimise their operations when
society’s norms and expectations of the business entities change or the business entities perceive
themselves in breach of existing norms and expectations of society (Deegan 2002; Deegan & Blomquist
2006; O’Donovan 2002).
● Agency Theory
The agency theory is generally concerned with the relationship between the agent and the principal
(De Villiers, et al., 2011). The theory defines the separation problem between a firm’s ownership and
control. The agency theory also posits that the board is responsible to monitor management’s sustainable
policy and strategy (environmental and social policy, strategic CSR, environmental investment, and
information availability). It is also evident that social and environmental investment is generally a
long-term goal and management may be reluctant to invest in sustainable areas because there is no
immediate benefit (Chan, 2014).

Proposed Research Design, Methods and Procedures

The proponents will ​use the required data from the selected companies published sustainability reports from
2013-2017 to measure the financial performance of the selected companies. The companies are selected based on the
companies who prepared and have published sustainability reports from the year 2013-2017. The dimensions of
sustainability reporting were determined, and their level of exercise was measured, based on analyzing the content of
these reports and the financial indicators of financial performance.
Aggarwal, P. (2013). Impact of sustainability performance of companies on its financial performance: A study of
listed Indian companies. Global Journal of Management & Business Research Finance , Vol. 13 (11),

Belal, A. R., Owen, D. L. (2007). "The views of corporate managers on the current state of, and future prospects for,
social reporting in Bangladesh: An engagement-based study", Accounting, Auditing & Accountability
Journal, Vol. 20 Issue: 3, pp.472-494,

Bouten, L., & Hoozée, S. (2013). “On the interplay between environmental reporting and management accounting
change”. Management Accounting Research, ​24(​ 4), 333–348.

Brammer, S.J. and Pavelin, S. (2006). “Corporate reputation and social performance: the importance of fit”, Journal
of Management Studies, 43(3), pp. 435-455.

Chan, M.C.C.; Watson, J.; Woodliff, D. (2014). “Corporate Governance Quality and CSR Disclosures”, J. Bus.
Ethics 2014, 125, 59–73

Deegan, C. (2002). “The legitimising effect of social and environmental disclosures – a theoretical foundation”,
Accounting, Auditing, & Accountability Journal, vol.15, no.3, pp. 282-311.

Deegan, C & Blomquist, C 2006, “Stakeholder influence on corporate reporting an exploration of the interaction
between WWF-Australia and the Australian minerals industry”, Accounting, Organizations & Society,
vol.3, no.4-5, pp343-373.

De Villiers, C.; Naiker, V.; van Staden, C.J. (2011). “The Effect of Board Characteristics on Firm Environmental
Performance”, J. Manag., 37, 1636–1663.

Ebdane, T.M. (2016). “The Impact Of Sustainability Reporting On Company Performance: The Philippine
Perspective”, ​.Journal of Asia Entrepreneurship and Sustainability; Tauranga Vol. 12, Iss. 1, 34-76.

Hohnen, P. & Potts, J. (2007). Corporate Social Responsibility: An Implementation Guide for Business.
International Institute for Sustainable Development. Retrieved: June 2015:
Jamali, D., Mezher, T. & Bitar, H. (2006). Corporate social responsibility and the challenge of triple bottom line
integration: insights from the Lebanese context

Makni, R., Francoeur, C. and Bellavance, F. (2009). Causality between corporate Social performance and financial
performance: Evidence from Canadian firms, Journal of Business Ethics, 89(3), pp. 409-422.

Preston, L.E. and O’Bannon, D.P. (1997). The Corporate Social-Financial Performance Relationship A Typology
and Analysis, Business Society, 36(4), pp. 419-429.

Sustainability Disclosure Database. Retrieved from:

Truant, E., Corazza, L. & Domenico, S. (2017). Sustainability and Risk Disclosure: An Exploratory Study on
Sustainability Reports.

Companies in the Philippines that have published Sustainability Reports

Ayala Land - 2007-2008 SR; 2009-2010 AR; 2011-2016 AR & SR

Fujitsu Philippines - 2000-2013 SR; 2014 ER
Manila Water - 2004-2010 AR&SR; 2011-2014 SR; 2015-2016 AR&SR
Land Bank of the Philippines - 2012-2016
First Philippines Holding Corporation - 2016-2017
PLDT - 2015-2017
Yokogawa Philippines - 1999-2005 ER; 2006-2017 SR
Samsung Philippines - 2004-2005 Green Management. Report; 2006-2007 Environmental & Social
Report; 2008-2018 SR
Maynilad Water Services Inc. - 2011-2017
Kia Motors’ Philippines - 2009-2016
Nickel Asia Corporation Philippines - 2013-2017
Globe - 2013-2017
Petron - 2008-2010; 2012-2013
SM Investments Corporation - 2013-2016 ESG Report; 2016-2017 SR
Development Bank of the Philippines - 2008-2013