Impact of Sustainability Reporting on Financial Performance: A Multigroup Analysis of Jordanian Firms in High-Pollution and Low-Pollution Industries

As global emphasis on environmental, social, and governance practices intensifies, sustainability reporting emerges as a critical tool for corporate transparency and accountability. The study aims to assess the impact of sustainability reporting on the financial performance of listed companies in Jordan. Using a quantitative approach, a total of 588 individuals were surveyed from low-pollution and high-pollution industries using purposive sampling techniques. Partial Least Square Structural Equation Modeling (PLS-SEM) was used to conduct analysis of the data with the aid of SMART PLS4 software. The study finds that the impact of sustainability disclosures on firms’ financial performance in Jordan differs significantly by both the type of disclosure and the pollution intensity of the industry the firms belong to. Environmental impact reporting (EIR) and social impact reporting (SIR) both have positive and significant effects on financial performance, especially in low-pollution industries, probably because of a perceived proactive and authentic integration of sustainability practices. However, governance impact reporting (GIR) shows a negative relationship with financial performance, which implies that such disclosures may be perceived as compliance-driven or not authentic. These findings indicate that the context of the sustainability reporting strategy is an important element in determining its effect on financial performance. The multigroup analysis (MGA) results help us to gain a better understanding of how different sectors leverage financial value from disclosing their sustainability activities. The study confirms that sustainability disclosure is not just a compliance requirement, but an instrument that can help firms improve their financial performance. Finally, we recommend that future research should investigate deeper psychological and social mechanisms likely to influence stakeholder responses across different sectors and countries within the region.