The Moderating Role of Sustainability Reporting Frameworks on the Relationship between Environmental, Social and Governance Performance and Firm Performance in Malaysia

Lim, Ying Shing (2025) The Moderating Role of Sustainability Reporting Frameworks on the Relationship between Environmental, Social and Governance Performance and Firm Performance in Malaysia. Masters thesis, Tunku Abdul Rahman University of Management and Technology.

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Abstract

Broadly speaking, the Global Reporting Initiative (GRI) and Sustainability Accounting Standards Board (SASB) have been popular sustainability reporting frameworks for firms. The introduction of the mandatory sustainability reporting of the National Sustainability Reporting Framework in Malaysia raises an important empirical question of whether existing voluntary reporting frameworks such as the GRI and SASB are still worthy of adoption. Accordingly, this study aims to analyse the relationship between environmental, social and governance (ESG) performance and firm performance based on 41 firms listed on the Main Market of Bursa Malaysia for the period 2018 to 2023. Additionally, this study also examines the moderating role of the adoption of the GRI as well as the moderating role of the combined adoption of the GRI and SASB on the relationship between ESG performance and firm performance. This study employs the fixed effects model to carry out the empirical analyses. According to the research findings, this study concludes that ESG performance has a positive and statistically significant relationship with firm performance. Furthermore, this research finds that the adoption of the GRI does not have a significant moderating effect on the relationship between ESG performance and firm performance. Lastly, this study reveals that the combined adoption of the GRI and SASB has a significant positive moderating effect on the relationship between ESG performance and firm performance. The empirical findings of this study have several important implications. First, policymakers may use this insight to refine disclosure policies and consider promoting the use of multiple sustainability frameworks, potentially blending voluntary and mandatory approaches. Additionally, public listed companies may consider the combined adoption of the GRI and SASB as a strategic move to build investor confidence. Besides, investors and portfolio managers may prioritise firms that adopt both the GRI and SASB in their portfolios, which can support more informed ESG-based investment decisions.