Evaluating the Impact of Sustainability Reporting on Financial Performance of Selected Indian Companies

In today's world merely being a profitable firm is not enough. Transparency and accountability also are not sufficient to become a successful firm. Stakeholders expect the firms to be sustainable. “Sustainable” more commonly mean meeting the needs of the present generation without compromising for the future generation. With the raising measures towards sustainability, stakeholders and company itself has recognised the importance of sustainability. This paper is an attempt to study the impact of sustainability reporting on the Firm's profitability. The major issue is to examine the extent to which the sustainability measures of the firm affect its profitability. Global Reporting Initiative (GRI) guidelines help to identify the sustainability measures as overall sustainability reporting scores (OSR) and the scores of its four key variables viz. community (COM), employee (EMP), environment (EMP) and governance (GOV). This study thus attempts to evaluate the impact of these scores on the profitability of the selected firms (as measured by ROA, ROE, ROCE, PBT and GTA) using a sample of 103 companies listed on NSE and reporting on sustainability. Period of the study is of six years from 2009–2010 to 2014–15 and Multiple Regression Analysis has been used to evaluate the impact of sustainability on firm's profitability and test the significance of the sustainability components thereby. The study concludes that overall sustainability reporting practices have a significant positive impact on firm's profitability to some extent. Thus the firms must take serious steps towards adequate adoption and reporting of the sustainability measures to improve their profitability.