Abstract

Introduction

Literature review and developing hypotheses

Theoretical framework

Methodology

Descriptive analysis

Findings and discussion

Conclusion

Disclosure statement

Notes on contributor

References

Abstract

     This study investigates the relationship between the level of sustainability reporting and retail sectors’ performance (operational, financial and market). Using data culled from 4065 observations from 38 different countries for ten years (2008–۲۰۱۷), an ‎independent variable derived from ESG score are regressed against dependent manufacture performance indicator variables [Return on Assets (ROA), Return on Equity (ROE) and Tobin’s Q (TQ)]. Two types of control variables complete the regression analysis in this study: firm-specific and macroeconomic. The findings elicited from the empirical results demonstrate that there is a significant relationship between ESG and operational performance (ROA), financial performance (ROE) and market performance (TQ). The model in this study presents a valuable analytical framework for exploring sustainability reporting as a driver of performance in retail sectors’ economies. In addition, the results of this study has significant implications for retailers, as it allows the current retailers to consider the possible sustainable activities for better outcomes, and encourages newcomers to find different sustainability approaches to attempt to offer better returns.

Introduction

     The retail sector is an international economic powerhouse that is expected to increase to US$28 trillion by 2019 (Businesswire 2016). Despite that retail sector represents 31% of the world’s gross domestic product (GDP), which means that the retail sector has fundamental economic power and substantial environmental impacts. These include impacts from retailing operations (Brancoli, Rousta, and Bolton 2017; Bradley 2016; Zaatari, Novoselac, and Siegel 2016) and from the production of retailed goods (Cimini and Moresi 2018).

     As the retail sector plays an important international economic sector, it must play a leading role in identifying and implementing sustainable solutions (Buallay et al. 2020a). In contrast to the anti-industry, anti-profit and anti-growth orientation of much of the early environmentalist movement, it has become increasingly clear that the business sector must play a central role in achieving the goals of sustainable development strategies (Buallay 2019a)). Retailers adopt different corporate sustainability actions and strategies to decrease the internal and external impacts of their operations (Naidoo and Gasparatos 2018). Understanding the motivations of retailers for adopting sustainability is necessary for determining the possible financial benefits (Al Hawaj and Buallay 2021).

Conclusion

     This study investigates the relationship between the level of sustainability reporting and retail sectors ’operational, financial and market Performance. Using data culled from 3311 observations in 50 different countries for ten years (2008–۲۰۱۷), an independent variable derived from ESG score are regressed against dependent manufacture performance indicator variables [Return on Assets (ROA), Return on Equity (ROE) and Tobin’s Q (TQ)]. Two types of control variables complete the regression analysis in this study: bank-specific and macroeconomic. The findings elicited from the empirical results demonstrate that there is a significant relationship between ESG and operational performance (ROA),f inancial performance (ROE) and market performance (TQ).

     There is a huge debate in the literature about whether sustainability is superior when it comes to generating returns. These studies have been conducted in different geographic locations in both developed and undeveloped markets. The new idea of this paper is that we provided a study on retail sector, which as to the extent of our knowledge, has not been done before. The results of this study has significant implications for retailers, regulators, investors. The study has significant implication on the mentioned parties as it allows them to consider the possible sustainable activities of current retailers, and therefore should encourage newcomers to find different sustainability approaches to attempt to offer better returns.