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Institutional Ownership and Climate-Related Disclosures in Malaysia: The Moderating Role of Sustainability Committees

Author

Listed:
  • Heba Mousa Mousa Hikal

    (Department of Accounting, Faculty of Business Studies, Arab Open University, P.O. Box 84901, Riyadh 11681, Saudi Arabia)

  • Abbas Abdelrahman Adam Abdalla

    (Faculty of Business, Economics and Social Development, Universiti Malaysia Terengganu, Kuala Terengganu 21300, Terengganu, Malaysia)

  • Iman Babiker

    (Department of Accounting, College of Business Administration, Princess Nourah bint Abdulrahman University, P.O. Box 84428, Riyadh 11671, Saudi Arabia)

  • Aida Osman Abdalla Bilal

    (Department of Accounting, College of Business Administration, Princess Nourah bint Abdulrahman University, P.O. Box 84428, Riyadh 11671, Saudi Arabia)

  • Bashir Bakri Agib Babiker

    (Department of Accounting, College of Administrative Sciences, University of the Holy Quran and Islamic Sciences, Omdurman P.O. Box 1459, Sudan
    Department of Economics and Finance College of Business Administration, Taif University, P.O. Box 11099, Taif 21944, Saudi Arabia)

  • Abubkr Ahmed Elhadi Abdelraheem

    (Department of Accounting, College of Business Administration, Prince Sattam Bin Abdulaziz University, Hawtat Bani Tamim 16622, Saudi Arabia)

  • Shadia Daoud Gamer

    (Department of Finance, College of Business, Imam Mohammad Ibn Saud Islamic University, Riyadh 11461, Saudi Arabia)

Abstract

This study explores the relationship between institutional shareholders and climate-related disclosure (CRD) and how sustainability committees influence this relationship among publicly listed Malaysian firms. For the analysis, 990 firm-year observations were studied from 198 highly polluting firms from 2021 to 2024. A strong CRD index was designed using the recognized climate reporting frameworks and well-grounded literature to assess the level of climate-related disclosure. Fixed-effects and hierarchical panel regression models show that CRD increases when institutional investor ownership increases, meaning firms with more institutional investors disclose more information on climate-related topics. In addition, a sustainability committee at the board level greatly improves this relationship by highlighting the positive impact of strong internal governance. As a result, such committees establish climate management and improve communication with investors, making the firm’s actions more transparent. The findings of this study are consistent with agency and legitimacy theories because institutional investors assist in monitoring firms’ environmental performance, and sustainability committees help the company maintain these standards internally. Further, this study helps grow the understanding of corporate governance (CG) and sustainability by pointing out that the presence of institutional owners and sustainability committees can promote openness about climate matters. Accordingly, these findings can guide policymakers, investors, and business leaders in boosting responsible environmental reporting and sustainable business practices in developing countries.

Suggested Citation

  • Heba Mousa Mousa Hikal & Abbas Abdelrahman Adam Abdalla & Iman Babiker & Aida Osman Abdalla Bilal & Bashir Bakri Agib Babiker & Abubkr Ahmed Elhadi Abdelraheem & Shadia Daoud Gamer, 2025. "Institutional Ownership and Climate-Related Disclosures in Malaysia: The Moderating Role of Sustainability Committees," Sustainability, MDPI, vol. 17(14), pages 1-29, July.
    • Handle: RePEc:gam:jsusta:v:17:y:2025:i:14:p:6528-:d:1703243
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    as
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