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The Impact of Adherence to Sustainable Development, as Defined by the Global Reporting Initiative (GRI-G4), on the Financial Performance Indicators of Banks: A Comparative Study of the UAE and Iraq

Author

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  • Ali Mohammed Abbas AL-Janabi

    (Department of Economics and Administrative Sciences, Ferdowsi University of Mashhad, Mashhad 9177948974, Iran)

  • Mohammad Javad Saei

    (Department of Economics and Administrative Sciences, Ferdowsi University of Mashhad, Mashhad 9177948974, Iran)

  • Reza Hesarzadeh

    (Department of Economics and Administrative Sciences, Ferdowsi University of Mashhad, Mashhad 9177948974, Iran)

Abstract

Based on stakeholder theory, disclosing sustainable development information is fundamental to achieving a competitive advantage and improving a company’s financial performance. There has been a notable absence of studies examining the degree of adherence to sustainability based on the latest indicators from the Global Reporting Initiative (GRI-G4) Guidelines and its impact on financial performance, specifically within the banking sector in emerging Arab economies. Consequently, this study explores the correlation between the degree of adherence to sustainability and its dimensions (economic, social, and environmental) as defined by GRI-G4 and financial performance within a sample of banks in Arab nations (the United Arab Emirates “UAE” and Iraq) from 2019 to 2021. The research hypotheses were examined using a multiple linear regression model. The empirical findings reveal that, on average, UAE banks exhibit a sustainability adherence level of 57% according to GRI-G4, while their Iraqi counterparts demonstrate a significantly lower adherence of 17%. Notably, the degree of sustainability adherence substantially impacts the financial performance of banks in both countries. Furthermore, the results also indicated that the economic dimension of sustainability has a positive impact, while the environmental dimension has a negative impact, and in contrast, the social dimension does not significantly affect the financial performance of banks in both countries. This study provides insights for banks and policymakers to enhance their sustainability practices and elevate the level of disclosure, especially within Arab nations. This, in turn, can lead to greater compliance with sustainability standards, improved transparency, and reduced information asymmetry.

Suggested Citation

  • Ali Mohammed Abbas AL-Janabi & Mohammad Javad Saei & Reza Hesarzadeh, 2024. "The Impact of Adherence to Sustainable Development, as Defined by the Global Reporting Initiative (GRI-G4), on the Financial Performance Indicators of Banks: A Comparative Study of the UAE and Iraq," JRFM, MDPI, vol. 17(1), pages 1-21, January.
    • Handle: RePEc:gam:jjrfmx:v:17:y:2024:i:1:p:17-:d:1312815
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    References listed on IDEAS

    as
    1. Sudipta Bose & Habib Zaman Khan & Afzalur Rashid & Shajul Islam, 2018. "What drives green banking disclosure? An institutional and corporate governance perspective," Asia Pacific Journal of Management, Springer, vol. 35(2), pages 501-527, June.
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    3. N. G. Nwaigwe & G. N. Ofoegbu & N. O. Dibia & C. V. Nwaogwugwu, 2022. "Sustainability disclosure: Impact of its extent and quality on value of listed firms in Nigeria," Cogent Business & Management, Taylor & Francis Journals, vol. 9(1), pages 2079393-207, December.
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    More about this item

    Keywords

    sustainable development; global reporting initiative; guidelines G4; stakeholder theory; financial performance; commercial banks;
    All these keywords.

    JEL classification:

    • G4 - Financial Economics - - Behavioral Finance

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