Sustainability has become an issue of major concern in the corporate world today. In recent times, investors have become more concerned about sustainability, hence sustainability has the potential to influence a firm‟s performance. This research examined the effect of sustainability reporting on corporate performance of Dangote Cement Company in Nigeria. To determine the association between sustainability reporting and corporate performance, data was obtained from the audited financial statements of Dangote Cement Company under study for a period of five years (2012-2016). The result of the study shows that Economic Performance disclosure (ECN), Environmental Performance disclosure (ENV) and Social Performance disclosure (SOC) have no significant effect on return on asset (ROA) of selected quoted firms in Nigeria.

Keywords: Sustainability Reporting, Firm Performance, Return on Assets, Triple Bottom Line, Corporate Social Responsibility

1.1 Background of study
Organizations are generally established with an objective to maximize shareholders welfare while remaining profitable. More often than not, activities carried on by these organizations tell on the immediate environment in which they are located as well as the environment at large. In recent times, sustainability has become an issue of major concern around the globe. As defined by Brundtland (1987) sustainability entails meeting the needs of the present generation without compromising the ability of future generations to meet their own needs. Investors have also continued to increase demand for non- financial information one of which is a company‟s sustainability report. As a result, sustainability reporting as part of corporate reporting is fast gaining momentum especially with the adoption of International Financial Reporting Standards (IFRS) which emphasizes a lot on disclosures.

Sustainability reporting as described by Elkington (2004) is the integration of reporting and accounting for social, environmental and economic issues in corporate reporting or simply the „Tipple bottom line reporting‟. The concept of sustainability reporting maintains that while a firm strives to achieve its traditional objectives of profit maximization, it is important that this profit is maximized through activities that seek to integrate social and environmental considerations into the decision-making process. An organization being part of a large system which has both direct and indirect influences on its operation and continued survival must effectively consider the social, environmental and economic effects of its activities.

Firms are facing increasing demands from their stakeholders to integrate their efforts in environmental, social, and economic realms to ensure a sustainable world. Oil and Gas industries, in particular, are vulnerable to such pressures due to the nature of their business. Two of the identifying characteristics of the oil and gas industries are depleted products used as inputs for many finished products and do not renew in a short time frame along with the activities of extraction of oil and gas which leave environmental and social footprints. The demands for these inputs are increasing as they are needed worldwide to improve the standards and quality of living of this generation. Unless these activities are properly managed, they can result in irreversible harm to the communities.(Lee et al, 2011) A case in point is the recent oil spills in the Gulf of Mexico that not only damaged the ecosystem close to the drilling activity but also affected the livelihood of people that are reliant on the fishing and hospitality industries in New Orleans. There were quite a few instances that have brought oil and gas industries to their knees due to their mismanagement of resources.

The responsibility of a firm does not end at compliance to regulations and mandates, but to develop safeguards that will prevent disastrous events from occurring. The responsibility should also extend above and beyond to serve the current and future interests of the society. The notion of engaging beyond compliance is ethically desirable, albeit, it takes away resources from a firm’s immediate needs. There are studies that argue that it is not at the best interest of shareholders that a firm spends resources beyond compliance (Friedman 1970; Walley & Whitehead 1994; Elgin 2007).

Sustainability is a conceptual framework that recognizes that a viable relationship exists between an organization’s economic growth and its environmental and social activities.

Sustainability has been primarily used as a dialogue to frame business strategy as a dynamic approach for managers to frame organizational strategies and associated business activities. For managers, sustainability provides them a framework to view the business as having interdependence and intertwined in the local and regional as well as international communities for continued growth and profitability. (Fiksel et al, 1999)

Sustainability as an integrated framework encourages managers to reorient their business for new strategy and growth in new areas. It helps link the capabilities of business leadership and employees capabilities/competencies to align them with organizational resources. (Fiksel et al, 1999)

Most of the study however, had revealed on both negative and positive effects of financial and sustainability reporting. Interestingly enough, substantial disagreement still about whether management is obliged to focus on business in a more narrow sense relating all activities directly to financial performance or whether management has a social responsibility that requires voluntary social and environmental activities exceeding the compliance with regulations (Freeman 1984; Friedman 1997). This disagreement is strongly coloured by different ideologies and by perceptions of the social embeddedness and role of a company, ethical perspectives of leadership and the role of stakeholders in setting up a business.

According to Vlek and Steg (2007), as human population continues to grow, material consumption intensifies and production technology further expands there is a steady decline in the quantity and quality of environmental resources. There is continuing concern about nature fragmentation and loss of biodiversity, shortages in freshwater availability, over-fishing of the seas, global warming, extreme weather events, air pollution, water pollution, environmental noise and utter neglect and disregard for the protection of the immediate environment, much more the future environment. This type of environmental unsustainability associated with continuously rising demand and a shrinking resource base now spills over into social and economic instability.

In line with the above mentioned, organizations have been identified as central to the problem and must also be central to the solution. As pointed out by Welford (1997), organizations seem relaxed watching the natural system of the planet disintegrating, people starving and social structures falling apart. Human activities taking place today have a detrimental impact on the society, ecology and economy which future generations will experience. Increased social injustice experienced by people in the society and the increased damage to the ecosphere, are a result of objective of maximizing economic growth (Unerman, Bebbington & O‟Dwyer, 2007). As a result, the expectations of corporate responsibility in areas such as environmental protection, human rights, human capital, and product safety are rising rapidly. Key stakeholders such as shareholders, employees, and financial institutions want business to be responsible, accountable and transparent (Aondoakaa, 2015).

Unerman et al (2007) is of the view that one way to address these issues is in terms of long-term need to ensure that economic activity is socially and environmentally sustainable. In the short-term it may be possible to have economic growth, while damaging society and the environment, but in the long-term this is impossible. Therefore, if organizations carry out their activities in such a way that causes continuous damage to the society leading to an unstable environment for economic activities, such an organizations‟ activities are neither economically nor socially sustainable.

Expectation for all organizations to be more transparent in how they treat the environment, how they handle their corporate governance issues, how they treat their employees, and how they treat their communities has continued to increase. Sustainability tends to focus on how to organize and manage human activities in such a way that they meet physical and psychological needs without compromising the ecological, social or economic base which enable these needs to be met. Unerman et al (2007) maintains that in practice, attempts to account for social, environmental and economic performance has increased among many organizations.

1.2 Statement of Problem
Organizations have increasingly embraced sustainability reporting. According to Global Reporting Initiative (2011), thousands of organizations worldwide now produce sustainability reports. KPMG International Survey of 2011 which covers 34 countries including Nigeria shows that 95 percent of the 250 largest global companies now report on their corporate responsibility activities. This is in response to the increased demand by stakeholders for organizations to be more transparent in how they treat their economic, social and environmental activities.

It has been agreed by world business leaders and through academic research that sustainability tells on a firm‟s corporate responsibility, therefore any company that does not produce sustainability report could be seen as working towards unsustainable development.

The results however of most Sustainability Reporting and financial performance studies are either inconclusive or contradictory, reporting positive or sometimes negative results. Moreover, most of these studies were conducted in developed countries with properly enacted environmental and social laws which is not the case of Nigeria. Therefore, this study was carried out to evaluate the effect of Sustainability Reporting on corporate performance of selected quoted firms in Nigeria.

1.3 Research Objectives
The primary objective of this research was to ascertain the effect of Sustainability Reporting and its major components on corporate performance in a Nigerian context by studying selected quoted companies in Nigeria.

The specific objectives of this research were:

1. To ascertain the effect of economic performance disclosure (ECN) on Return on Assets of selected quoted firms in Nigeria.

2. To examine the effect of environmental performance disclosure (ENV) on Return on Assets of selected quoted firms in Nigeria.

3. To analyze the effect social performance disclosure (SOC) on Return of Assets of selected quoted firms in Nigeria.

1.4 Research Hypotheses
In this study, the following hypothesis stated in null form were tested:

H0: Economic Performance disclosure (ECN) has no significant effect on return on asset (ROA) of selected quoted firms in Nigeria

H0: Environmental Performance disclosure (ENV) has no significant effect on return on asset (ROA) of selected quoted firms in Nigeria

H0: Social Performance disclosure (SOC) has no significant effect on return on asset (ROA) of selected quoted firms in Nigeria

1.6 Significance of study
The outcome of this study will be of immense benefits to potential and existing investors in the sense that it shows how responsible a company they wish to invest in is and how willing they will be to make investment. Companies can also monitor their performance when they see how their report on sustainability affects their financial performance and their operating environment. This can help them achieve customer loyalty, greater access to finance and increased brand value. Creditors will also benefit as it shows the financial standing of the company as this will boost their confidence in the company. Academic researchers will also benefit as this will contribute to the body of existing literature which will be of immense benefit in the future. This study covers a period of five years, from 2011 to 2015 annual report data of twenty Nigerian companies who made the Forbes Africa top twenty five companies in West Africa in 2012. Forbes Africa (2012) Return on asset, economic, environmental and social data were extracted for the years under study. 2011 was chosen because the ranking was made in 2012 and 2011 annual accounts must have contributed immensely to their ranking performance. The rest of the study is divided into review of related literature, methodology, data analysis, conclusion and recommendations.

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Item Type: Project Material  |  Size: 50 pages  |  Chapters: 1-5
Format: MS Word  |  Delivery: Within 30Mins.


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