Environmental Science and Pollution Research

, Volume 26, Issue 8, pp 8157–8168 | Cite as

The impact of sustainability performance indicators on financial stability: evidence from the Russian oil and gas industry

  • Nurlan OrazalinEmail author
  • Monowar Mahmood
  • Timur Narbaev
Research Article


Considering the dearth of research on the impact of sustainability reporting practices on financial stability in the context of transition economies, this study aims to explore sustainability reporting practices of top oil and gas companies in Russia and investigate the effects of sustainability performance indicators on financial stability in the context of a given emerging economy. The study is based on panel data analysis of sustainability performance indicators and financial data of forty-five largest oil and gas companies listed on the Russian Trading Stock Exchange over the period 2012–2016. Data on sustainability performance were collected through analyzing sustainability reports and annual reports, while financial data were obtained from audited financial statements downloaded from company websites. The empirical results indicate that companies improve their sustainability performance indicators in order to manage risk and improve their financial stability. The results also show that firm-specific characteristics, such as financial capacity, leverage, firm size, and firm age, are important underlying factors affecting the degree of financial distress and financial stability. The findings of the study provide managers and practitioners with useful aspects of sustainability performance indicators to improve financial stability and mitigate financial distress. Additionally, investors and practitioners should consider other underlying factors, including financial capacity, leverage, firm size, and firm age, that may influence financial stability. Finally, the findings are useful for policymakers and regulators in promoting Global Reporting Initiative guidelines which will ultimately lead to sustainable development and financial stability in the context of emerging markets.


Global reporting initiative Sustainability reporting Financial stability Russia Emerging markets 



  1. Andreassen N (2016) Arctic energy development in Russia—how “sustainability” can fit? Energy Res Soc Sci 16:78–88. CrossRefGoogle Scholar
  2. Benlemlih M, Girerd-Potin I (2017) Corporate social responsibility and firm financial risk reduction: on the moderating role of the legal environment. J Bus Financ Account 44:1137–1166. CrossRefGoogle Scholar
  3. Bear S, Rahman N, Post C (2010) The Impact of Board Diversity and Gender Composition on Corporate Social Responsibility and Firm Reputation. J Bus Ethics 97:207–221.
  4. Bobylev S, Perelet R (2013) Sustainable development in Russia. Russian–German Environmental Information Bureau, Berlin–St. PetersburgGoogle Scholar
  5. Bouslah K, Kryzanowski L, M’Zali B (2016) Social performance and firm risk: impact of the financial crisis. J Bus Ethics 149:643–669. CrossRefGoogle Scholar
  6. Brammer S, Pavelin S (2008) Factors influencing the quality of corporate environmental disclosure. Bus Strateg Environ 17:120–136. CrossRefGoogle Scholar
  7. Brown HS, de Jong M, Lessidrenska T (2009) The rise of the global reporting initiative: a case of institutional entrepreneurship. Environ Polit 18:182–200. CrossRefGoogle Scholar
  8. Chatterjee S, Hadi A, Price B (2000) Regression analysis by example, third edit edn. John Wiley and Sons, Inc., New YorkGoogle Scholar
  9. Chava S (2014) Environmental externalities and cost of capital. Manag Sci 60:2223–2247. CrossRefGoogle Scholar
  10. Chen H, Wang X (2011) Corporate social responsibility and corporate financial performance in China: an empirical research from Chinese firms. Corp Gov 11:361–370. CrossRefGoogle Scholar
  11. Cheng S, Lin KZ, Wong W (2016) Corporate social responsibility reporting and firm performance: evidence from China. J Manag Gov 20:503–523. CrossRefGoogle Scholar
  12. Cheung YL, Jiang P, Tan W (2010) A transparency disclosure index measuring disclosures: Chinese listed companies. J Account Public Policy 29:259–280. CrossRefGoogle Scholar
  13. Cho SY, Lee C, Pfeiffer RJ (2013) Corporate social responsibility performance and information asymmetry. J Account Public Policy 32:71–83. CrossRefGoogle Scholar
  14. Clarkson PM, Li Y, Richardson GD, Vasvari FP (2011) Does it really pay to be green? Determinants and consequences of proactive environmental strategies. J Account Public Policy 30:122–144. CrossRefGoogle Scholar
  15. Czarnitzki D, Kraft K (2007) Are credit ratings valuable information? Appl Financ Econ 17:1061–1070. CrossRefGoogle Scholar
  16. De Villiers C, Low M, Samkin G (2014) The institutionalisation of mining company sustainability disclosures. J Clean Prod 84:51–58. CrossRefGoogle Scholar
  17. Dhaliwal DS, Li OZ, Tsang A, Yang YG (2011) Voluntary nonfinancial disclosure and the cost of equity capital: the initiation of corporate social responsibility reporting. Account Rev 86:59–100. CrossRefGoogle Scholar
  18. Dilling PFA (2010) Sustainability reporting in a global context: what are the characteristics of corporations that provide high quality sustainability reports—an empirical analysis. Int Bus Econ Res J 9:19–30.
  19. Dissanayake D, Tilt C, Xydias-Lobo M (2016) Sustainability reporting by publicly listed companies in Sri Lanka. J Clean Prod 129:169–182. CrossRefGoogle Scholar
  20. Ehnert I, Parsa S, Roper I, Wagner M, Muller-Camen M (2016) Reporting on sustainability and HRM: a comparative study of sustainability reporting practices by the world’s largest companies. Int J Hum Resour Manag 27:88–108. CrossRefGoogle Scholar
  21. El Ghoul S, Guedhami O, Kwok CCY et al (2011) Does corporate social responsibility affect the cost of capital? J Bank Financ 35:2388–2406. CrossRefGoogle Scholar
  22. Fazio DM, Tabak BM, Cajueiro DO (2015) Inflation targeting: is IT to blame for banking system instability? J Bank Financ 59:76–97. CrossRefGoogle Scholar
  23. Fifka MS, Pobizhan M (2014) An institutional approach to corporate social responsibility in Russia. J Clean Prod 82:192–201. CrossRefGoogle Scholar
  24. Fonseca A, McAllister ML, Fitzpatrick P (2012) Sustainability reporting among mining corporations: a constructive critique of the GRI approach. J Clean Prod 84:70–83. CrossRefGoogle Scholar
  25. Godfrey PC (2005) The relationship between corporate philanthropy and shareholder wealth: a risk management perspective. Acad Manag Rev 30:777–798CrossRefGoogle Scholar
  26. Gong Y, Ho K-C (2017) Does corporate social responsibility matter for corporate stability? Evidence from China. Qual Quant 52:2291–2319. CrossRefGoogle Scholar
  27. Goss A (2009) Corporate social responsibility and financial distress. ASAC 30:Google Scholar
  28. Goss A, Roberts GS (2011) The impact of corporate social responsibility on the cost of bank loans. J Bank Financ 35:1794–1810. CrossRefGoogle Scholar
  29. Guidry RP, Patten DM (2012) Voluntary disclosure theory and financial control variables: an assessment of recent environmental disclosure research. Account Forum 36:81–90. CrossRefGoogle Scholar
  30. Gupta K, Krishnamurti C (2016) Does corporate social responsibility engagement benefit distressed firms? The role of moral and exchange capital. Pacific Basin Financ. JGoogle Scholar
  31. Habek P (2014) Evaluation of sustainability reporting practices in Poland. Qual Quant 48:1739–1752. CrossRefGoogle Scholar
  32. Jensen MC, Meckling WH (1976) Theory of the firm: managerial behavior, agency costs and ownership structure. J Financ Econ 3:305–360CrossRefGoogle Scholar
  33. Jiraporn P, Jiraporn N, Boeprasert A, Chang K (2014) Does corporate social responsibility (CSR) improve credit ratings? Evidence from geographic identification. Financ Manag 43:505–531. CrossRefGoogle Scholar
  34. Jo H, Harjoto MA (2011) Corporate Governance and Firm Value: The Impact of Corporate Social Responsibility. J Bus Ethics 103:351–383.
  35. Jo H, Na H (2012) Does CSR reduce firm risk? Evidence from controversial industry sectors. J Bus Ethics 110:441–456. CrossRefGoogle Scholar
  36. Jobbágy P, Bai A (2012) The effects of global real economic crisis on the markets for fossil and renewable fuels. Appl Stud Agribus Commer—APSTRACT 6:51–56CrossRefGoogle Scholar
  37. Kılıç M, Kuzey C, Uyar A (2015) The impact of ownership and board structure on corporate social responsibility in the Turkish banking industry. Corp Gov Int J Bus Soc 15:357–374Google Scholar
  38. Kim Y, Park MS, Wier B (2012) Is earnings quality associated with corporate social responsibility? Account Rev 87:761–796. CrossRefGoogle Scholar
  39. Kuranchie-Pong L, Bokpin GA, Andoh C (2016) Empirical evidence on disclosure and risk-taking of banks in Ghana. J Financ Regul Compliance 24:197–212. CrossRefGoogle Scholar
  40. Kuzey C, Uyar A (2017) Determinants of sustainability reporting and its impact on firm value: evidence from the emerging market of Turkey. J Clean Prod 143:27–39. CrossRefGoogle Scholar
  41. Laeven L, Levine R (2009) Bank governance, regulation and risk taking. J Financ Econ 93:259–275. CrossRefGoogle Scholar
  42. Lozano R, Huisingh D (2011) Inter-linking issues and dimensions in sustainability reporting. J Clean Prod 19:99–107. CrossRefGoogle Scholar
  43. Mahmood M, Orazalin N (2017) Green governance and sustainability reporting in Kazakhstan’s oil, gas, and mining sector: evidence from a former USSR emerging economy. J Clean Prod 164:389–397. CrossRefGoogle Scholar
  44. Michelon G, Pilonato S, Ricceri F (2015) CSR reporting practices and the quality of disclosure: an empirical analysis. Crit Perspect Account 33:59–78. CrossRefGoogle Scholar
  45. Nahar S, Azim M, Anne Jubb C (2016) Risk disclosure, cost of capital and bank performance. Int J Account Inf Manag 24:476–494. CrossRefGoogle Scholar
  46. Oláh J, Bai A, Karmazin G, Balogh P, Popp J (2017) The role played by trust and its effect on the competiveness of logistics service providers in Hungary. Sustainability 9:2303. CrossRefGoogle Scholar
  47. Orazalin N, Mahmood M (2018) Economic, environmental, and social performance indicators of sustainability reporting: evidence from the Russian oil and gas industry. Energy Policy 121:70–79. CrossRefGoogle Scholar
  48. Orlitzky M, Benjamin JD (2001) Corporate social performance and firm risk: a meta-analytic review. Bus Soc 40:369–396. CrossRefGoogle Scholar
  49. Pallant J (2007) SPSS survival manual: a step by step guide to data analysis using SPSS for Windows (version 15), Version 15. Open University Press, McGraw Hill, New York, NYGoogle Scholar
  50. Qiu Y, Shaukat A, Tharyan R (2016) Environmental and social disclosures: link with corporate financial performance. Br Account Rev 48:102–116. CrossRefGoogle Scholar
  51. Rajgopal S, Venkatachalam M (2011) Financial reporting quality and idiosyncratic return volatility. J Account Econ 51:1–20. CrossRefGoogle Scholar
  52. Russian Union of Industrialists and Entrepreneurs (2017) Business Practice in the mirror of reporting: present and futureGoogle Scholar
  53. Sartori S, Witjes S, Campos LMS (2017) Sustainability performance for Brazilian electricity power industry: an assessment integrating social, economic and environmental issues. Energy Policy 111:41–51. CrossRefGoogle Scholar
  54. Sharfman MP, Fernando CS (2008) Environmental risk management and the cost of capital. Strateg Manag J 29:569–592. CrossRefGoogle Scholar
  55. Shvarts EA, Pakhalov AM, Knizhnikov AY (2016) Assessment of environmental responsibility of oil and gas companies in Russia: the rating method. J Clean Prod 127:143–151. CrossRefGoogle Scholar
  56. Simola H, Solanko L (2017) Overview of Russia’s oil and gas sector. 3–30Google Scholar
  57. Sun W, Cui K (2014) Linking corporate social responsibility to firm default risk. Eur Manag J 32:275–287. CrossRefGoogle Scholar
  58. Torjai L, Nagy J, Bai A (2015) Decision hierarchy, competitive priorities and indicators in large-scale “herbaceous biomass to energy” supply chains. Biomass Bioenergy 80:321–329. CrossRefGoogle Scholar
  59. Tuzova Y, Qayum F (2016) Global oil glut and sanctions: the impact on Putin’s Russia. Energy Policy 90:140–151. CrossRefGoogle Scholar
  60. Wood DJ (1991) Corporate social performance revisited. Acad Manag Rev 16:691–718. CrossRefGoogle Scholar
  61. World Bank (2006) World development report. The World Bank and Oxford University Press, New YorkGoogle Scholar

Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2019

Authors and Affiliations

  • Nurlan Orazalin
    • 1
    Email author
  • Monowar Mahmood
    • 2
  • Timur Narbaev
    • 3
  1. 1.Bang College of BusinessKIMEP UniversityAlmatyKazakhstan
  2. 2.Bang College of BusinessKIMEP UniversityAlmatyKazakhstan
  3. 3.Business SchoolKazakh-British Technical UniversityAlmatyKazakhstan

Personalised recommendations