Sustainability Reporting and Financial Performance: A Conceptual Landscape

Abstract

As more and more corporate reports tend to project their financial performance to the public, stakeholders worry about reports on economic, social and environmental concerns. This paper succinctly explored the subject area by providing a theoretical understanding of the topic and analysis of the different perspectives to understanding sustainability reporting based on: the stakeholder theory and stewardship theory. The triple bottom line reporting concept was discussed and aced with a model framework for understanding the relationship between triple bottom line reporting, sustainability and economic performance. The argument whether or not sustainability reporting provides a cost or profitability to organisations is rested on a mutual benefit for both the reporting entity and the society itself in the long run. The paper concludes that improved stakeholder engagement from decreased agency cost and transparency due to a decreased information asymmetry will ultimately spur performance resulting from loyalty and improved reputation, and recommend that sustainability reporting should be a legal requirement to corporate entities backed by government support at all levels.

Keywords: Sustainability, performance, corporations, triple bottom line.