Sustainability Disclosure and Financial Performance of Oil and Gas Companies in Nigeria

Abstract

The continuous involvement of companies in non-sustainable practices and lack of responsibility toward the environment and society have brought economic crises and untold hardship on almost all the stakeholders. The main aim of this study was to ascertain the effect of sustainability disclosure on financial performance of oil and gas companies listed on the floor of the Nigeria Exchange Group for the period 2012-2021. The dependent variable of the study being financial performance was proxied by return on capital employed (ROCE) while the independent variable of the study being sustainability disclosure was proxied by social, economic, environmental and governance practices disclosure. The research design adopted for the study was ex post facto, secondary data were used, four hypotheses were tested using pool ordinary least square regression analysis and the statistical software employed was STATA 14. The findings of the analysis revealed that social sustainability disclosure, economic sustainability disclosure, environmental sustainability and governance disclosure have significant positive effect on return on capital employed of oil and gas companies in Nigeria. Thus, it was concluded that sustainability disclosure has significant effect on financial performance of oil and gas companies in Nigeria. Based on these findings, it was recommended among others that Oil and gas companies should carry out and disclose corporate sustainability practices that are commensurate with the negative impact of the economic activities on the host communities. This is because though these activities involve a huge capital out lay; this study revealed that in the long run, this investment would generate significant returns for the company.

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