Sustainability Reporting and Its Impact on Financial Performance: A Study of the Sri Lankan Financial Sector

The sustainability reporting which integrates the organization’s economic, environmental and social performance towards achieving better financial performance has become a contemporary issue due to the absence of a precise model or a rigid regulatory framework in this arena. Therefore, the purpose of this study is to identify whether there is a significant difference in sustainable disclosures among the financial institutes and how sustainability reporting influence on institutional performance. Accordingly, the author derived a disclosure index from the Global Reporting Initiative (GRI) guidelines which consist of 119 parameters to evaluate the content of the reports of listed banks and financial sector companies. Analysis provided a comparison between GRI guidelines and Generation four (G4) framework. Furthermore, the study investigated the causal relationship between the level of disclosures and financial performance. To serve this purpose, data was obtained from annual reports in the Security Exchange Commission (SEC), and companies’ websites then analyzed quantitatively using SPSS 16 data analysis package.The results of the study conclude that there’s no significant difference in sustainability disclosures between listed banks and financial institutes and the number of disclosures has no significant influence on institutes’ financial performance. Furthermore, the study confirmed that there’s no significant difference between G4 framework disclosures (Adopted in 2016/2017 reporting period) and GRI guidelines (Adopted in 2017/2018 reporting period). Thereby, the study witnessed that businesses including financial institutes consume scarce resources, while paying poor attention in reporting their accountability towards the sustenance. Therefore, it needs recognizing sustainable responsibility. KeywordsCorporate Disclosures; Financial Institutions; Financial Performance, Sustainability/Integrated Reporting