Sustainability Reporting and Financial Performance: Evidence from Listed Companies in Sri Lanka

The disclosure of how an organization’s operations affect the economy, environment, and society is known as sustainability reporting. In the past, organizations caused problems by using natural resources without limits. But as the situation changed, it became important to preserve resources for the next generation. This concern led to a shift from traditional financial reporting to sustainability reporting. The main objective of this research study is to explore the relationship between the sustainability reporting and the financial performance of the organizations listed in Sri Lanka. It particularly focuses on the economic, environmental, and social dimensions of sustainability. The data for the analysis purpose was collected using 50 non-financial companies listed on the Colombo stock exchange over five years. The purpose of the study is to examine how financial performance, as determined by return on equity and return on assets, is impacted by sustainability reporting standards. As the research findings the social sustainability reporting has no effect on the ROE, but economic and environmental sustainability reporting do have impact on the ROE. Further, ROA is not affected by economic sustainability reporting but affected by both social and environmental sustainability reporting.