Do Actions Speak? Signaling Sustainability Performance

• In Event: Public Interest

Abstract

As companies increasingly invest and disclose their sustainability efforts, it is not clear which initiatives have an actual reputational value. We theorize the relationship between sustainability performance signals and reputation to examine how companies convey their commitment to sustainability and whether external stakeholders are attuned to these signals. The signals we explore are firm’s disclosure-based sustainability performance indicators and external assurance of disclosure. We argue that superior performers are more likely to obtain assurance of their disclosure and, performance and assurance, are expected to have a positive association with corporate sustainability reputation. Based on a global sample of 100 companies representing 20 percent of the total global market capitalization and a diverse industry make-up, we find positive and statistically significant relationships between superior disclosure-based sustainability performance and sustainability reputation. Companies with better performance were also more likely to obtain external assurance of their sustainability disclosure. As it relates to sustainability efforts, companies from certain industries are more likely to be perceived negatively and require additional signifiers of performance.

Author

• Anna Alon, Rollins College