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Governance and Sustainability: Future Perspective for Business, Economy and Society

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A special issue of Sustainability (ISSN 2071-1050). This special issue belongs to the section "Economic and Business Aspects of Sustainability".

Deadline for manuscript submissions: closed (31 July 2022) | Viewed by 20237

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Special Issue Editor

Prof. Guler Aras

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Guest Editor

Yildiz Technical University Center for Finance Governance and Sustainability
Interests: corporate finance; corporate governance; corporate sustainability; corporate social responsibility (CSR); integrated reporting; capital market development; institutional investors; banks and capital market efficiency; stakeholders; regulation; sustainable finance

Special Issue Information

Dear Colleagues,

Today, it is not possible for institutions to convince their stakeholders about the continuity of their activities and their potential to fulfill their obligations only through their financial results. Sustainable performance and the sharing of reliable data are crucial to be able to attract long-term investors. At present, a growing number of institutional investors have realized that environmental, social, and governance performance has become financial in the long run. Therefore, investors have started to give more importance to investigate the link behind nonfinancial information, including environmental, social, and governance disclosures, to understand the connections of companies with both risks and opportunities. Along with this trend, it has become even more important and necessary for companies to create value for all stakeholders and to share information about their value creation process with their investors and other stakeholders.

This Special Issue welcomes papers on, but not limited to, the following topics:

Role of sustainability disclosures on firm value;
Institutional investors and corporate sustainability;
Integrated governance;
Governance in financial markets and institutions;
Sustainable finance instruments (green bonds, social bonds, etc.);
ESG investing in capital markets;
Responsible management;
Role of legal regulations in the sustainable development of businesses and markets;
Measuring stakeholder capitalism;
Sustainable value creation and impact measurement;
Impact investing;
Sustainable Development Goals disclosures and investment decisions;
Integrated thinking and reporting;
Board performance and governance;
Responsible and sustainable leadership;
Shareholder activism, shareholder protection, and valuation effects;
Socially responsible investing.

Studies on all related disciplines are welcome, including economics, finance, law, social sciences, computer science, engineering, operation research, management, and so on. Transdisciplinary and intersectoral (co-authored with non-academic experts) papers are also welcome.
This Special Issue will become a major reference on sustainability and corporate governance with related scope. Additionally, this issue is intended to be a preferred publication for not only for scholars but also for practitioners, consultants, and leaders engaged with sustainability and corporate governance.

Prof. Guler Aras
Guest Editor

Manuscript Submission Information

Manuscripts should be submitted online at www.mdpi.com by registering and logging in to this website. Once you are registered, click here to go to the submission form. Manuscripts can be submitted until the deadline. All submissions that pass pre-check are peer-reviewed. Accepted papers will be published continuously in the journal (as soon as accepted) and will be listed together on the special issue website. Research articles, review articles as well as short communications are invited. For planned papers, a title and short abstract (about 100 words) can be sent to the Editorial Office for announcement on this website.

Submitted manuscripts should not have been published previously, nor be under consideration for publication elsewhere (except conference proceedings papers). All manuscripts are thoroughly refereed through a single-blind peer-review process. A guide for authors and other relevant information for submission of manuscripts is available on the Instructions for Authors page. Sustainability is an international peer-reviewed open access semimonthly journal published by MDPI.

Please visit the Instructions for Authors page before submitting a manuscript. The Article Processing Charge (APC) for publication in this open access journal is 2400 CHF (Swiss Francs). Submitted papers should be well formatted and use good English. Authors may use MDPI's English editing service prior to publication or during author revisions.

Keywords

sustainability
corporate governance
ESG
sustainable value
investment decisions
sustainable finance
sustainability disclosures
sustainable development goals
ESG investing
green financing
sustainability impact measurement
valuation
SDG’s sustainable leadership, board performance
shareholder rights
proxy voting
regulation

Published Papers (5 papers)

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Research

29 pages, 924 KiB

Open AccessArticle

Enhancing Firm Value through the Lens of ESG Materiality: Evidence from the Banking Sector in OECD Countries

by Guler Aras and Evrim Hacioglu Kazak

Sustainability 2022, 14(22), 15302; https://doi.org/10.3390/su142215302 - 17 Nov 2022

Cited by 1 | Viewed by 3015

Abstract

Momentous developments in the regulatory environment, increasing investor demand, and growing awareness of climate change and societal issues are leading banks to adopt a comprehensive approach beyond the traditional financial lens. Assessing performance towards sustainability issues, including environmental, social, and corporate governance (ESG), and its’ relevance in firm value in the banking sector offers a field of continuous interest for researchers. This paper investigates the role of ESG materiality in firm value, based on a sample of banks operating in OECD countries, for the period 2016–2020. Adopting the materiality classification for the banking sector provided by the Sustainability Accounting Standards Board (SASB), the study consists of a multi-layer methodology. In the first stage, a dynamic technique for order preference by similarity to ideal solution (TOPSIS) and entropy methods are utilized to calculate ESG score based on ESG materiality for 1115 bank-year observations while in the second stage, value relevance analyses are applied in order to reveal whether ESG materiality affects firm value. The results depict that ESG performance based on ESG materiality has a positive influence on the firm value for both models, price-to-book value ratio (PBV), and Tobin’s Q (TQ). Moreover, collected from the Refinitiv database, ESG combined has a low impact on PBR whereas there is no significant effect on TQ. The implication is that the firm value is influenced by the materiality-adjusted ESG performance than by the extended ESG spectrum. Full article

(This article belongs to the Special Issue Governance and Sustainability: Future Perspective for Business, Economy and Society)

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14 pages, 301 KiB

Open AccessArticle

Determinants and Value Relevance of Voluntary Assurance of Sustainability Reports in a Mandatory Reporting Context: Evidence from Europe

by Heidi Vander Bauwhede and Philippe Van Cauwenberge

Sustainability 2022, 14(15), 9795; https://doi.org/10.3390/su14159795 - 08 Aug 2022

Cited by 7 | Viewed by 3530

Abstract

This paper investigates the determinants of sustainability report (SR) assurance and whether this assurance is value relevant within the context of the European Union (EU), where, under the Non-Financial Reporting Directive (NFRD), sustainability reporting is mandatory for large public interest entities (PIE) as of fiscal year 2017. Using a sample of 1832 firm-year observations from 660 European listed companies over the period 2017–2020, the results of a logistic regression analysis indicate that firm size, environmental, social and governance (ESG) performance and industry affiliation are important drivers of the demand for SR assurance. The value relevance regressions suggest that SR assurance is positively associated with the stock market value. The study contributes to the existing knowledge on SR assurance by documenting its determinants and value relevance in a context where sustainability reporting is mandatory and that is predominantly stakeholder-oriented. The results may be of interest to companies that consider to adopt SR assurance in such a context and to the European Commission (EC), which has included a mandatory SR assurance requirement in the proposed Corporate Sustainability Reporting Directive (CSRD), the successor to the NFRD. Full article

(This article belongs to the Special Issue Governance and Sustainability: Future Perspective for Business, Economy and Society)

26 pages, 900 KiB

Open AccessArticle

Harmonization of Sustainability Reporting Regulation: Analysis of a Contested Arena

by Hammed Afolabi, Ronita Ram and Gunnar Rimmel

Sustainability 2022, 14(9), 5517; https://doi.org/10.3390/su14095517 - 04 May 2022

Cited by 18 | Viewed by 6136

Abstract

This paper presents the case for the sustainability reporting field as a contested arena and examines the behavior and the influence of the various actors, such as the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB), the International Integrated Reporting Council (IIRC), and the European Commission, including the European Financial Reporting Advisory Group (EFRAG) and the International Financial Reporting Standards (IFRS) Foundation in influencing the shape of the regulation in the arena. Drawing on the arena concept and documentary analysis, this study explores the dynamic in which each actor is attempting to change the rules within the arena and how this contributes to the harmonization and future direction of sustainability reporting. The findings of this study show that the actions and behavior of the various actors are premeditated and strategically calculated to maintain their influence, relevance, and defend their technical authority in the arena. The findings also suggest that sustainability reporting regulation is still far away from harmonization due to the perceived hegemony in the arena, and diversity in the overarching objective of the various actors and the inability of each actor to renounce its particular perspective and orientation. Insights are provided for policy makers on the urgent need to decide and reclassify the specific rules required in upholding the sustainability reporting arena. Full article

(This article belongs to the Special Issue Governance and Sustainability: Future Perspective for Business, Economy and Society)

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19 pages, 1861 KiB

Open AccessArticle

Integrated Reporting and Integrated Thinking: Proposing a Reporting Model That Induces More Responsible Use of Corporate Power

by Guler Aras and Paul F. Williams

Sustainability 2022, 14(6), 3277; https://doi.org/10.3390/su14063277 - 10 Mar 2022

Cited by 1 | Viewed by 2711

Abstract

The obligations of corporations to members of society have been problematic since the corporate form came into existence. Under different rubrics, reporting firms’ socially responsible behavior has been extensively debated, and researched, for at least the past half century. The latest incarnation of corporate social reporting is labeled integrated reporting—the blending of the traditional financial report with a report on the firms’ achievements as socially responsible beings. In this paper, we provide a brief history of corporate social reporting to provide sufficient context for our discussion of a model of integrative reporting that provides for a better representation of just how socially responsible firms are. Progress so far in achieving meaningful integrated reporting that produces more socially responsible corporate citizens is disappointing. The structured narrative of financial performance still dominates the unstructured narrative about social performance. We argue this is partially attributable to two intellectual constraints limiting our ability to imagine systems that could produce better social outcomes from corporate behavior. One constraint is the dominance of “decision usefulness” as the purpose of accounting. The second intellectual constraint is the reluctance to seriously consider that the problem of corporate social responsibility (CSR) lies in the corporate form itself. Thus far, the integration of these reports to give equal status to financial and social performance is not close to achievement. We propose that a first step to developing an integrated report is to adopt a governmental reporting model for corporations. If the six capitals model proposed by IIRC is to be a movement toward more ethical corporate behavior, then the six capitals must be deemed as equally valuable ends and certainly not subservient to only financial ends. The current financial reporting model strongly mitigates against this happening. We argue that each of the capitals is analogous to what in governmental parlance is a “program” or “function,” which require the commitment of financial resources for accomplishment. Thus, a truly integrated report will disclose to all stakeholders what resources are committed to enhancing each of the six capitals as ends in themselves. Full article

(This article belongs to the Special Issue Governance and Sustainability: Future Perspective for Business, Economy and Society)

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23 pages, 1826 KiB

Open AccessArticle

Analysis of Environmental Management Characteristics Using Network Analysis of CEO Communication in the Automotive Industry

by Yongkyu Choi and Keun Tae Cho

Sustainability 2021, 13(21), 11987; https://doi.org/10.3390/su132111987 - 29 Oct 2021

Cited by 2 | Viewed by 2958

Abstract

CEO messages in CEO communication are becoming increasingly important. From a sustainable management perspective, it is imperative to study environmental, social, and governance messages. Previous studies on CEO messages have focused on financial analyses. In contrast, this study (1) extracted environment-related words in the CEO messages of automotive companies, (2) selected high- and low-performing automotive manufacturers based on car sales data, (3) compared environment-related keywords used by high-performing (upper group) and low-performing (lower group) companies, and (4) performed a structural interpretation of the keywords to analyze the characteristics of environmental management. A comparison between the upper and lower groups revealed that six keywords—society, electric, technology, standards, contribute, and global—were exclusive to the upper group. The six keywords exclusive to the lower group were sales, target, promote, energy, efforts, and system. Environmental keywords and eco-innovation factors were subjected to keyword–factor mapping and network analysis. Normative pressures, technology, and environmental managerial concerns were the key factors with the highest centrality. Accordingly, the environmental management characteristics of the upper-group corporations can be used as benchmarks by lower groups. Full article

(This article belongs to the Special Issue Governance and Sustainability: Future Perspective for Business, Economy and Society)

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