Social and environmental accounting disclosure and financial performance: Evidence from a developing country Bangladesh

Abstract

This study aims to explore how social and environmental accounting (SEA) disclosures affect the financial performance of 30 publicly listed companies in Bangladesh from 2020 to 2024. A composite SEA disclosure index was developed using five disclosure categories: environmental management, energy efficiency, employee welfare, community involvement, and customer responsibility. These were scored based on information from annual and sustainability reports. The study applied pooled ordinary least squares (OLS) regression on 150 firm-year observations, while controlling for firm size, leverage, operational efficiency, capital intensity, and industry-specific factors. The analysis indicates a positive but statistically insignificant relationship between SEA disclosure scores and return on assets (ROA). During the course of the study, SEA reporting significantly increased, particularly in terms of community involvement and employee welfare, whereas disclosures related to energy efficiency remained limited. Companies appear to be engaging in SEA reporting primarily for legitimacy rather than for quick financial gains. This analysis confirms that SEA practices in the Bangladeshi context have yet to make significant progress in terms of short-term profitability. This research recommends that the strategic benefits of SEA disclosure can be increased through regulatory standardization, capacity-building programs, and the development of integrated reporting. Future research should focus on the long-term impact and quality of disclosure. Additionally, cross-country comparative studies are recommended.