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Title: The Impact of Sustainability Reporting on Corporate Financial Performance: A Systematic Literature Review


In recent years, the concept of sustainability has gained significant attention from various stakeholders, including governments, investors, and consumers. Sustainability reporting, also known as corporate social responsibility (CSR) reporting, has emerged as an essential tool for corporations to communicate their environmental, social, and governance (ESG) performance to stakeholders. This systematic literature review aims to analyze and synthesize existing research on the impact of sustainability reporting on corporate financial performance.

Literature Review

Sustainability reporting has gained popularity as a means for companies to demonstrate their commitment to addressing environmental and social challenges. The potential benefits of sustainability reporting include improved transparency, enhanced brand reputation, and stakeholder engagement. However, the relationship between sustainability reporting and financial performance remains a subject of debate among researchers and practitioners.

Numerous studies have investigated the link between sustainability reporting and financial performance using various methodologies and datasets. One approach commonly adopted in these studies is event study methodology, which assesses the market reaction to the release of sustainability reports. Event study findings have shown mixed results, with some studies finding a positive impact on stock prices following sustainability report disclosures, while others observe a negative or insignificant market reaction.

Moreover, researchers have explored the relationship between sustainability reporting and accounting-based financial performance measures. Accounting-based measures include return on assets (ROA), return on equity (ROE), and earnings per share (EPS). Results from these studies also present conflicting findings, with some studies reporting a positive association between sustainability reporting and financial performance, while others finding no significant relationship.

Another aspect that researchers have attempted to investigate is the impact of the quality of sustainability reporting on financial performance. The quality of sustainability reporting is often assessed using reporting frameworks or indices, such as the Global Reporting Initiative (GRI) and Dow Jones Sustainability Index (DJSI). While some studies argue that higher sustainability reporting quality positively influences financial performance, others suggest that there might be a non-linear relationship, indicating that excessive disclosure could have detrimental effects.

In addition to the above, researchers have examined the moderating effect of firm characteristics on the relationship between sustainability reporting and financial performance. Factors such as industry type, firm size, and ownership structure have been suggested as potential moderators. For instance, some studies propose that sustainability reporting might have a stronger positive effect on the financial performance of firms operating in industries with high environmental or social risks, as well as those with a larger asset base.

Theoretical Framework

To provide a theoretical framework for analyzing the relationship between sustainability reporting and financial performance, this review will apply stakeholder theory and agency theory. According to stakeholder theory, corporations have a responsibility to balance the interests of various stakeholders, including shareholders, employees, customers, and communities. One of the main arguments supporting the positive impact of sustainability reporting on financial performance is that it enhances stakeholder trust and engagement, leading to increased firm value.

On the other hand, agency theory suggests that managers may prioritize their own interests instead of maximizing shareholder value. However, sustainability reporting can act as a monitoring mechanism by improving firm transparency and reducing informational asymmetry between managers and shareholders. As a result, it is expected that sustainability reporting can mitigate agency costs and positively impact financial performance.


To conduct this systematic literature review, a comprehensive search of academic databases will be conducted, including Scopus, Web of Science, and Google Scholar. The search will be limited to articles published in English and will include keywords such as “sustainability reporting,” “corporate financial performance,” and “CSR reporting.” The inclusion and exclusion criteria will be applied to select relevant articles, and their findings will be extracted and synthesized.


As sustainability reporting gains traction as a means to communicate environmental, social, and governance performance, understanding its impact on corporate financial performance is crucial. Through this systematic literature review, we aim to consolidate existing research findings and shed light on the relationship between sustainability reporting and financial performance. The results of this study will contribute to the growing body of knowledge on sustainable business practices and help inform decision-makers in their pursuit of sustainable strategies.