Sustainability transitions in corporations: The influence of the sustainable development goals on corporate financial performance

Abstract

Scholarly, there is growing interest in corporations transitioning towards adopting SDGs. However, there is still a gap in understanding how the SDGs influence business performance and operations. Identifying various conditions under which governance through goal setting might have been effective and accelerating the transition to sustainability is essential. This study explores these questions through a case study of how Malaysian corporations’ financial performance has been connected with SDG 13. The study examines whether and in what ways implementing and voluntarily disclosing SDG 13 related information is associated with corporate financial performance. The findings suggest that adopting and disclosing SDG 13 is linked to improved corporate financial performance. Voluntary disclosure of sustainable-related information allows shareholders and the public to gain insight into corporate sustainability transitions. This reduces the information asymmetry gap between businesses and potential investors, which may increase investors' confidence. The positive correlation could encourage corporations to adopt more SDG goals. Investors who perceive improvement in firm performance may in turn call for deeper engagement with additionals. The paper concludes that conditions such as voluntary disclosure appear to support the sustainability transition of corporate actors by being associated with better performance outcomes.