Environmental, Social and Governance Indicators of Corporate Sustainability: A Developing Country Context.

The agenda of the European Union is the pursuit of a sustainable and renewable economy, which the European Commission is trying to achieve with an important reform of corporate reporting. According to the European Parliament and the Council in 2021, sustainability reporting, also known as non-financial reporting or environmental, social, and governance (ESG) reporting, will be accorded equal importance to financial information, marking a historic shift. This is due to the growing demand and interest of investors and other interested parties in terms of determining the impact of companies on the environment and society.

The purpose of the presented research project is to study the level of use of corporate sustainability reporting, determining factors and impact in the context of developing Georgia. Based on the European Commission Sustainability Reporting Directive (2021) and the Global Reporting Initiative, we will build a unique sustainability reporting assessment system that includes factors such as: emissions, climate change, water, land and air ecosystems, circular economy, biodiversity, equal rights and opportunities, cultural or ethnic diversity and inclusion, training, working conditions, work-life balance, work safety, business ethics, anti-corruption and anti-bribery policies, lobbying activities and others. Using various software packages/tools/programming languages (Python, STATA, ScrapeStorm, Link Klipper) we will analyze the numerical and textual parts of annual reports, and (where applicable) company websites. Based on unique information from hundreds (and possibly thousands) of Georgian private and public companies, we will study the level of corporate sustainability reporting use, determinants and impact on firm profitability.

The presented academically motivated and innovative methodology-based research concept, the scope of the planned work and the newly developed EU Sustainability Directive underline the fundamental and multi-disciplinary nature of the tactical research agenda. Our findings are likely to help local companies become more sustainability-oriented, which should help build trust between society and the corporate sector, and the latter may become the basis for capital market development.

The project is funded by the Shota Rustaveli National Science Foundation of Georgia with a grant for fundamental research within the framework of the state scientific grant competition. The head of the project is Erekle Pirveli.