The Relationship between Sustainability Corporate Governance Practices and Firm Social Performance Evidence from the European Oil & Gas Industry

Abstract

Within the Sustainability Reporting (SR) arena,an increasing number of companies began to draw-up stand-alone sustainability reports and/or a web-based report (Kolk, 2003; Simnett et al., 2009; Cohen et al., 2012; CRPerspectives, 2013; KPMG, 2011, 2013), both as an instrument of corporate accountability and as a tool for signaling corporate reputation for sustainability (Gomes et al., 2015). Given the high diversity of models of social reporting (SR) or CSR reporting, the recent proposal of a new form of corporate reporting, i.e. Integrated Reporting <IR> (IIRC, 2013; Eccles and Krzus, 2010, 2015; Busco et al., 2013) issued by the International Integrated Reporting Council can provide an interesting solution to combine financial and non-financial information effectively. IIRC highlights that connections between company’s strategy and governance with social and environmental performance are crucial to create value over short, medium and long term (IIRC, 2013). In this perspective, many organizations show a strong need to enhance the credibility of corporate sustainability performance (CSP) as it may be used as a suitable platform to disclose accountability, transparency and effectiveness of corporate governance to stakeholders as well as to society. As a result of this movement, there is an impetus to measure, summarize and monitor CSP through reliable indicators to show the extent to which a company embed environmental, social and governance (ESG) factors into its business activities (Artiach et al., 2010; Ferreira et al., 2010; Henri and Journeault, 2010) and to investigate the association between CSP and some internal and external factors, such as corporate governance sustainability-oriented activities, company’s financial performance and value creation process 
 Given these premises, this research aims to investigate, whether and to what extent, the corporate governance practices, addressed on CSR, exert an influence on firm social performance. We look into this research question, carrying out an empirical study on a sample of listed companies belonging to a well-known environmental-sensitive sector, i.e. the oil & gas industry (Cormier and Magnan, 2015).