Influence of firm-level characteristics on the sustainability reporting of Indian companies

The Global Reporting Initiative (GRI) has emerged as a globally accepted framework and standard for companies regarding CSR contribution and disclosure practices. The Global Reporting Initiative has been hailed as the de facto standard in transparency and sustainability reporting systems worldwide. Compliance with GRI has become imperative and has a far-reaching influence on making a business accepted globally. The study attempted to establish the relationship between level characteristics such as firm size, industry profile, legacy, shareholder dispersion, and firm performance as measured through ROCE and stock return and the extent of sustainability reporting captured by the disclosure index. A detailed analysis of the 77 nonfinancial services companies’ annual reports for four years is performed after 23 financial services companies are excluded from the nifty 100. The results of a thorough examination of sustainability reports from a few chosen organisations showed that social and environmental reporting is more comprehensive than economic and environmental reporting. A further significant discovery of this investigation is that Indian enterprises must prioritise full reporting using the sustainability reporting framework established by the Global Reporting Initiative (GRI), as they do not report on environmental indicators. The regression results revealed that market capitalisation consistently influences all three levels of compliance, i.e., economic, environmental, and social disclosures. The industry profile predicts environmental disclosures and social disclosures. The return on capital employed predicts economic disclosures, not environmental and social disclosures. The legacy of a firm is found to be a significant predictor of all three disclosure dimensions. Shareholder dispersion influenced only the environmental disclosures; no impact was seen on economic and social disclosures. Stock return is another independent variable that predicts economic and social disclosures. This study will assist policymakers in making companies more compliant with sustainability reporting in the Indian context.