Effect Of Sustainability Reporting On The Performance Of Listed Deposit Money Banks In Nigeria

Abstract

Sustainability reporting is a key aspect of corporate accountability, particularly in financial institutions facing complex regulatory and risk environments. Global standards, including the GRI and IFRS Sustainability Disclosure Standards, enhance the comparability and reliability of disclosures, but their impact on firm performance remains context-specific. In Nigeria, the CBN Sustainability Banking Principles advanced the integration of environmental, social, and governance (ESG) considerations in banks. Despite this, reporting among Deposit Money Banks (DMBs) remains uneven, often limited to selective disclosures with few measurable indicators, raising concerns about greenwashing and weak compliance. This study examined the effect of sustainability reporting on the financial performance of Nigerian Deposit Money Banks (DMBs) and the moderating role of regulatory compliance over 2014–2023. The population comprised all 13 listed DMBs, with a purposive sample of 10 banks selected based on consistent sustainability reporting, complete financial statements and ESG disclosures aligned with GRI Standards, IFRS S1 & S2, or CBN Sustainability Banking Principles. Secondary data were collected from annual reports, sustainability disclosures, CBN and NDIC reports, NGX Factbooks, and bank websites, with ESG disclosures systematically coded using a structured content analysis checklist. Data analysis was conducted using Jamovi Statistical Software (Version 2.6.26) employing descriptive, correlation, and regression analyses. Results indicate that environmental, social, and governance disclosures alone have positive but statistically insignificant effects on Return on Assets, while regulatory compliance exhibits a strong and significant positive impact, demonstrating that adherence to sustainability regulations is key to translating ESG reporting into financial performance. Governance disclosures emerged as the most influential ESG component. The study contributes to theory by validating Stakeholder, Institutional and Triple Bottom Line perspectives in a developing economy context and provides practical guidance to bank executives and regulators on strengthening ESG strategy, transparency and long-term value creation in the Nigerian banking sector.