Environmental Reporting and Financial Performance: Evidence From the Banking Sector in BRICS Countries

ABSTRACT This study analyzes the incidence of environmental reporting on the financial performance (FP) of top banks in Brazil, Russia, India, China and South Africa (“BRICS”) countries using data from 50 leading banks from 2018 to 2023. Using panel regression analysis, the findings indicate that environmental reporting significantly impacts accounting‐based financial indicators, specifically return on assets (ROA) and return on equity (ROE). Conversely, it shows a negative but statistically insignificant effect on diluted earnings per share (EPS). Environmental reporting significantly lowers Tobin's Q for market‐based performance indicators, whereas its impact on the market‐to‐book ratio (MBR) is positive yet not statistically significant. This research offers a unique contribution to the limited body of literature on the financial impacts of environmental reporting within the BRICS banking sector. It provides nuanced insights into how sustainability practices influence financial outcomes in emerging economies, highlighting varied effects across different financial metrics.