Journal
SUSTAINABILITY
Volume 13, Issue 9, Pages -Publisher
MDPI
DOI: 10.3390/su13094904
Keywords
CSR; disclosure extent; ESG performance; Global Reporting Initiative; GRI; legitimacy theory; non-financial reporting; signaling; sustainability reporting; voluntary disclosure
Funding
- Open Access Publication Fund of the University of Wuppertal
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The results indicate a positive relationship between environmental performance and environmental disclosure, while there is no relationship between social performance and social disclosure. This suggests that companies may signal their superior environmental performance through more extensive disclosure, as social performance does not seem to drive disclosure behavior.
Empirical studies present mixed evidence on the relationship of CSR performance and CSR disclosure extent, thus spurring academic ambiguity as legitimacy- and voluntary disclosure theory provide competing explanations. By applying content analysis to 144 voluntary GRI reports of listed firms in Germany from 2015 to 2018, I construct environmental and social disclosure indices to capture the reports' disclosure extents. The contents are extracted from the corresponding GRI content indices in order to mitigate potential coding errors. ESG scores are used as a third-party measure to proxy environmental and social performance. I propose that this approach could be more suitable to address the challenge within the literature concerning methodological heterogeneity. The results show a positive relationship of environmental performance and environmental disclosure, but no relationship of social performance and social disclosure. Hence, there is evidence for an at least partial performance driven reporting behavior as companies seem to signal their superior environmental performance via more extensive disclosure, as predicted by voluntary disclosure theory. This evidence supports the idea of tightening Directive 2014/95/EU.
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