Hae-Young Byun

Concerns for the environment and sustainability require entities to contribute to societal development toward sustainable advancement. There is also an increasing demand for high-quality and reliable reports on sustainability-related matters. The study aims to highlight the impact of sustainability reporting initiatives on financial performance through the GRI reporting framework and four determinants of financial performance – return on assets (ROA), return on equity (ROE), and basic and diluted earnings per share (EPS). Conducting random effects generalized least square (GLS) regression, this paper examines 127 firm-year observations from 47 Philippine listed entities covering 2019–2021. The results show a significant negative relationship between the total sustainability reporting initiative index score and financial performance, represented by return on equity (coefficient = –0.4690, z-value = –1.68). Moreover, there is a positive significant relationship between economic reporting and financial performance, particularly return on assets, basic earnings per share, and diluted earnings per share (coefficients = 0.1590, 12.6200, 12.6500; z-values = 3.11, 1.72, 1.73). A negative significant relationship exists between social reporting and financial performance, particularly return on equity and basic and diluted earnings per share (coefficients = –0.5530, –14.1600, –14.1400; z-values = –2.04, –2.65, –2.65). This study pioneers an investigation into the nascent implementation of Securities and Exchange Commission (SEC) sustainability reporting and the implications of sustainability initiatives on corporate performance in the Philippines. The results shed light on the dynamics of sustainability initiatives and financial outcomes to encourage firms to harmonize economic success with environmental preservation and societal advancement toward value creation.

Type of the article: Research Article

Abstract
The growing emphasis on sustainability and continuous innovation has changed the way firms approach value creation and performance. As firms increasingly adopt ESG initiatives and invest in technological innovation, understanding how these strategies jointly affect financial outcomes across different industry contexts becomes essential. The purpose of this study is to explore the valuation implications of the interplay between ESG initiatives and technological innovation, specifically in terms of accounting, valuation, and growth metrics of corporate operations, with a focus on comparing high-technology and low-technology industries. Utilizing random effects generalized least squares (GLS) regression, this paper examines 4,000 high-technology and 4,739 low-technology firm-year observations from KOSPI and KOSDAQ listed firms in Korea from 2012 to 2022. The results show that while the influence of environmental, social, and governance factors on corporate performance, firm value, and growth show specific implications across the two industries, both ESG adoption (ROA: –0.0025; p < 0.01; TQ: –0.0298; p < 0.05; SGR: –0.0052; p < 0.05) and research and development investments (ROA: –0.0928; p < 0.01; SGR: –0.1192; p < 0.01) tend to manifest a costly impact on corporate operations. Nevertheless, when these two elements are pursued together, the negative impacts are mitigated, ultimately leading to improvements in corporate performance (ROA: 0.0453; p < 0.01; TQ: 0.8902; p < 0.01 for high-tech industries; SGR: 0.0920; p < 0.10 for low-tech industries). This study provides a comparative analysis of the impact of ESG and innovation on corporate metrics across high- and low-technology industries. The findings show that integrating ESG with technological innovation can promote sustainable corporate operations across varying levels of technological intensity.

Acknowledgment
The authors would like to express their sincere appreciation to the Korea Institute of Corporate Governance and Sustainability (KCGS) for generously providing ESG ratings data for listed firms in South Korea. Their valuable support made these analyses possible.

Type of the article: Research Article

Abstract
Financial firms are emerging as key drivers of sustainable business, shaping development through the entities they choose to finance. The ownership structures and governance mechanisms of these firms can shape sustainability efforts, potentially affecting financial stability through risks and costs of implementation. This study aims to examine the impact of ESG initiatives on the financial stability of Korean financial firms and understand how ownership concentration moderates this relationship. Utilizing a fixed-effects regression model, the study investigates 537 firm-year observations across 53 Korean financial sector firms, including banks, insurance companies, securities firms, and diversified financial services firms, from 2012 to 2023. The analysis reveals that for banks, environmental sustainability initiatives are positively associated with financial stability (coefficient = 0.0017; t = 1.84), while social responsibility initiatives have a negative association (coefficient = –0.0018; t = –2.00). For insurance firms, overall sustainability efforts show a negative relationship with financial stability (coefficient = –0.0061; t = –1.72), driven mainly by the governance dimension (coefficient = –0.0074; t = –2.06). Additionally, in the case of banks, higher ownership concentration diminishes the positive impact of environmental sustainability on financial stability (coefficient = –0.0056; t = –1.90). Moreover, ownership concentration acts as a double-edged sword where its moderating impact varies depending on whether the financial firm is a high or low ESG performer. These findings highlight the importance of firm-specific dynamics in aligning with institutional and societal expectations of ESG while navigating the complexities of ownership concentration as a pathway for financial firms to maintain financial stability.

Acknowledgment
The authors would like to express their sincere appreciation to the Korea Institute of Corporate Governance and Sustainability (KCGS) for generously providing the ESG ratings data for financial firms in South Korea. Their valuable support made these analyses possible.