Позитивные изменения. Том 3, № 4 (2023). Positive changes. Volume 3, Issue 4(2023) - Редакция журнала «Позитивные изменения»

60 % of the 250 world’s largest companies achieved high sustainability reporting quality. Industries with higher scores include healthcare, telecommunications, and consumer goods, while construction, mining, and oil and gas industries have lower standards. Stakeholders, including investors, regulators, and civil society organizations, recognize the importance of high-quality sustainability reports (Global Reporting Initiative, 2016). High-quality sustainability reporting aids investors in making informed decisions about their investments’ long-term sustainability, while also assisting regulators in monitoring compliance with sustainability regulations.

Moreover, high-quality sustainability reporting can enhance the credibility and reputation of an organization, thereby strengthening its social license to operate (Orshi et al., 2023). Raising sustainability reporting standards can improve transparency and accountability, promoting economic viability.

Sustainability committees (or departments for sustainable development)[141], composed of representatives from various departments, are crucial for organizations to enhance the quality of their sustainability reporting. They oversee initiatives which include: the use of reusable devices, effective recycling to divert waste away from landfills; reducing unnecessary packaging; curtailing energy and water usage and report development. This is further supported by the study of KPMG (2017), which posits that companies with sustainability committees scored higher on their sustainability reporting quality compared to those without such committees. Organizations with sustainability committees tend to publish information about sustainability risks and opportunities, as well as activities taken to addressing such issues.

Sustainability risks relate to ESG issues. For example, Environmental Risks relates to the quality and functioning of the natural environment and systems, such as climate change, the loss of biodiversity, the disruption of ecosystems, pollution (air, water, soil) and depletion of raw materials. Social Risks — relates to the rights, wellbeing and interests of people and communities, such as poverty, human rights violations, racial discrimination, gender inequality, child labor. Governance Risks — relates to the quality of governance in companies such as transparency, corporate governance, responsible tax, diversity, bribery and corruption, and ethics violations.

Sustainability opportunities include: driving growth, maximising returns on investments, and increased revenue; optimising costs and reduced environmental and socio-economic impacts; reduced legal intervention; increased employee productivity, well-being, satisfaction, and retention; customer retention and increased shareholder value.

Sustainability committees ensure integration of sustainability initiatives and company strategy, incorporating representatives from diverse departments. This article explores the impact of sustainability committee attributes on sustainability reporting quality among selected banks in Nigeria and South Africa, based on regulatory agencies’ prioritization of sustainability engagement. In the African continent, South Africa leads in sustainability matters, followed by Nigeria and Kenya. However, data from Kenya and other countries is challenging to obtain. While South Africa enforces mandatory reporting, its adoption in Nigeria is voluntary.

LITERATURE REVIEW AND HYPOTHESES DEVELOPMENT

Sustainability reporting is the publication of data on a company’s sustainability performance and its impact on society and the environment (Orshi et al., 2022a, b). Sustainability reporting quality refers to the extent of information provided about a company’s social, environmental, and economic impact, ensuring it is accurate, comparative, and intelligible (Hidayah et al., 2023). It is the degree to which a company’s sustainability report provides relevant, reliable, and transparent information on its ESG performance (Erin et al., 2022).

The Global Reporting Initiative (GRI) is the most widely used framework for producing standardized sustainability reports, setting rules for reporting on ESG and economic issues, while the Sustainability Accounting Standards Board (SASB) establishes industry-specific sustainability reporting requirements. The International Integrated Reporting Council encourages integrated reporting, merging financial and sustainability reporting into a single report (International Integrated Reporting Council, n.d.).

The sustainability committee oversees the company’s sustainability strategy, efforts, and reporting, offering diverse perspectives and expertise but also posing challenges in decisionmaking and communication. Studies show a correlation between sustainability committee attributes and standard sustainability reports, with committee size potentially influencing the quality of sustainability reporting. (Cho et al., 2020). According to Maroun and Nasr (2018), the size of a sustainability committee positively impacts the quality of sustainability reports, as larger committees offer more resources, expertise, and diverse perspectives, leading to higher-quality reports. Similarly, Kolk and Pinkse (2010) state that companies possessing larger sustainability committees tend to engage more in stakeholder dialogue and adopt a strategic approach to sustainability reporting. However, Lodhia et al. (2012) found that smaller sustainability committees can be more effective in decision-making and communication due to a higher level of engagement and commitment among committee members. The first research question is how does size of the sustainability committee impact the effectiveness and quality of sustainability reporting of banks in Nigeria and South Africa? This question is answered through empirical evidence obtained by testing the null hypothesis:

H0(1): Sustainability committee size has no significant effect on the sustainability reporting quality of banks in Nigeria and South Africa.

Bedard and Gendron (2010) found a favorable correlation between the existence and independence of a sustainability committee and the quality of sustainability reporting. The study emphasizes the significance of the independence of sustainability committees and concludes that organizations with more autonomous sustainability committees produced sustainability reports of higher quality. Furthermore, Cho et al. (2020) discovered that South Korean enterprises’ excellent sustainability reporting was favorably correlated with the independence of the sustainability committee. It should be noted that committees set-up by the board can be in influenced by the same board, either favourably or unfavourably.

The existence of an independent chair of the sustainability committee was shown to be favorably linked with the quality of sustainability reporting, according to another research by Deegan et al. (2011). These circumstances have set the stage for the following research question: How much does the independence of sustainability committees enhance the level of banks’ sustainability reporting in Nigeria and South Africa? The paper tests the following null hypothesis and uses the results to support its arguments.

H0(2): Sustainability committee independence has no significant effect on the sustainability reporting quality of banks in Nigeria and South Africa.

In addition, sustainability committee composition and diversity can significantly impact the sustainability reporting quality in an organization. Research has shown that having a diverse and well-balanced committee can lead to more comprehensive and transparent reporting