ABSTRACT

The purpose of this study is to investigate the link between good governance,
sustainability governance, sustainability reporting, as well as sustainable development for
various countries. Sustainable development focuses on economic, societal, and environmental
issues and is primarily established in response to growing issues related to the degradation of the
environment, global imbalances, and economic as well as socio-political instability. Because of
its only emphasis on profits, the traditional accounting system completely ignores issues such as
sustainable development. Therefore, sustainability reporting may be seen as a foundation for
achieving sustainable development. Consequently, the main focus of this research is to find out
the mediating role of sustainability reporting in the relationship between governance and
sustainable development at the country level. Likewise, the study also analyses the moderating
influence of environmental performance in the relationship between country-level governance
and sustainability reporting.

Institutional theory, stakeholder theory, and voluntary disclosure theory were used to
hypothesize various relationships proposed in this study. The empirical content in this study
relied on secondary data from 42 developed and developing countries for 6 years from 2014 to
2019. Data related to country-level sustainability reporting was obtained from the Global
Reporting Initiative (GRI). Good governance data were obtained from the worldwide governance
indicators (WGIs) published by the World Bank while data related to sustainable development
was obtained from the Sustainable Development Goals (SDGs) Index published by the
Sustainable Development Solution Networks for almost all countries. The index provides a
ranking of countries based on their SDGs performance that was considered as a proxy for
sustainable development of the country. Finally, in terms of data related to sustainability
governance, this research has developed an index that makes this research unique and distinctive.
The sustainability governance index includes renewable energy regulation, energy efficiency
regulation, and environmental-related treaties in force. Using E-views 9 software and applying
panel regression techniques, this thesis found a positive relationship between good governance
and sustainability reporting. Similarly, sustainability reporting has a positive impact on
sustainable development and this impact is greater in developed countries than in developing
countries. However, there was a negative relationship between good governance and sustainable
development. In contrast, sustainability governance has a positive impact on sustainable
development. Findings suggest a mediating role of sustainability reporting in the relationship
between governance and sustainable development. Finally, the study found that the
environmental performance of the country moderated the relationship between governance and
sustainability reporting.

This study contributes to the literature both empirically and theoretically. Empirically, this
study highlights the importance of sustainability reporting in sustainable development at the
country level. Another empirical contribution is the comparative analysis, revealing a stronger
impact in developed countries than in developing countries. This study also provides empirical
evidence to the fact that sustainability reporting plays an important role in the link between
governance and sustainable development. Theoretically, this research contributes to the
institutional theory by considering sustainability governance as an institution that is more
relevant to sustainability reporting and sustainable development. This study also supports
stakeholder theory, as sustainability reporting serves as a bridge between corporations and
societal actors. According to the findings of this study, sustainability reporting can also serve as
a link between governance and sustainable development. Finally, this research supports the
arguments of voluntary disclosure theory, as sustainability reporting was found to be more
prevalent in countries with superior environmental performance.

This study has several implications for regulatory bodies, government, policymakers,
society, the corporate world, and other stakeholders. Governments, policymakers, and other
stakeholders must work together to shift from the existing governance (governance of rule)
paradigm to sustainable governance, with an emphasis on sustainability reporting practices that
contribute to sustainable development. Similarly, for the corporate world, it is recommended that
firm executives have to play a crucial role in promoting a culture of sustainability reporting. It is
also advised that regulatory agencies, governments, legislators, and corporations develop and
enforce stringent environmental regulations that foster the development of sustainability
reporting practices.

Key Words: Sustainability Reporting, Sustainable Development, Good Governance,

Sustainability Governance, Environmental Performance Index, Developed
Countries, Developing Countries