Позитивные изменения. Том 3, № 4 (2023). Positive changes. Volume 3, Issue 4(2023)

There is no specific law in Nigeria and South Africa that requires banks to establish committees on sustainable development. However, in 2012, the Nigerian Bankers’ Committee approved the adoption of the Nigerian Sustainable Banking Principles (NSBP) by banks, discount houses, and development finance institutions. The NSBP aims to foster positive development impacts to society while protecting the environment and covers nine principles, including environmental and social risk management, financial inclusion, and reporting. In Ekiti State, Nigeria, the Sustainable Development Goals Law of 2019 establishes a committee to ensure that achieving Sustainable Development Goals is the guiding principle within all policy areas. In South Africa, there is voluntary guidance for JSE-listed companies on sustainability and climate-related disclosure that draws on existing international standards. The National Framework for Sustainable Development in South Africa provides the basis for integrating sustainability as a key component of the development discourse.

METHODOLOGY

The research covers a 10-year period from 2012 to 2021. This was a period of significant changes in sustainability reporting standards and regulations, as well as changes in the business environment in Nigeria and South Africa. All listed banks operating in Nigeria and South Africa, make up the study’s population. The study uses a purposive sampling technique, focusing on banks with sustainability committees. Table 1 shows details of the list of the purposive sample.

Moreover, data for the study is obtained from the MachameRatios database, a compilation of TalkData Associates, covering the study period. These include ESG disclosure, sustainability committee size, number of independent members, number of meetings, composition and diversity, expertise, and total assets.

The outcome variable of the study is sustainability reporting quality (SRQ). The GRI G4 sustainability reporting guidelines’ index of environmental, social, and governance disclosures serves as an indicator for it (Global Reporting Initiative, 2013). However, the sustainability committee attributes (size, independence, diversity, and diligence) constitute the independent variable. Sustainability committee size (SCSIZE) is determined by taking the total number of sustainability committee members (Maroun & Nasr, 2018); sustainability committee independence (SCINDEP) is calculated as number of independent directors on the sustainability committee divided by total membership (Cho et al., 2020); sustainability committee diversity (SCDIV) is expressed in terms of the number of females to the total number of sustainability committee members (Orlitzky et al., 2017); while sustainability committee diligence (SCDIL) is reflected by the frequency with which the committee meets per annum (Global Reporting Initiative, 2015; Sustainalytics, 2021). Thus, the study controls for the impact of company size (logarithm of total assets) on SRQ while analyzing the influence of sustainability committee features on the sustainability reporting quality of sampled banks. The reason for size control is that, depending on the situation, larger organizations may have more resources and complexity, which could influence their ability to address sustainability issues and report on them.

Table 1. The general matrix of life

Source: Field Survey, 2023.

Data obtained is analyzed via the multiple regression technique. The model specified for the study is stated as follows:

SRQ_i,t = β₀ + β₁SCSIZE_i,t + β₂SCINDEP_i,t + β₃SCDIV_i,t + β₄SCDIL_i,t + β₅FSIZE_i,t + ε_i,t (1)

where:

SRQ = Sustainability reporting quality;

SCSIZE = Sustainability committee size;

SCINDEP = Sustainability committee independence;

SCDIV = Sustainability committee diversity;

SCDIL = Sustainability committee diligence; CSIZE = Size of total assets;

ε = Error term;

β₀ = Constant/intercept;

β₁ — β₅ = Coefficients of explanatory variables; and

i,t = company i for time period t.

Furthermore, the a priori expectation of the study is that sustainability committee size, independence, diversity and diligence positively impact sustainability reporting quality of the sampled banks. This is expressed as SCSIZE > 0; SCINDEP > 0; SCDIV > 0; and SCDIL > 0.

RESULTS AND DISCUSSION Descriptive and correlational statistics are provided in Tables 2 and 3 respectively for the variables being examined in this study: SRQ (N, mil.), SCSIZE (N, mil.), SCINDEP (mil.), SCDIV (mil.), SCDIL (mil.) and CSIZE (mil.)

Table 2 presents the minimum and maximum values of the indicator for sustainability reporting quality (SRQ), which are 0.264 and 0.868, respectively, and shows that the data for SRQ of sampled companies are narrowly dispersed from the mean of 0.601, given the standard deviation of 0.144.