SDG reporting and sustainability performance: insights from Italian companies

Purpose: This study aims to investigate the role of SDG reporting in influencing sustainability performance. In doing so, it seeks to clarify whether talking about sustainability, by addressing the SDGs, can be considered a driver for companies to walk towards sustainability and, consequently, an improvement in a company’s sustainability performance. Furthermore, since companies may perform differently across various ESG areas, this study examines the relationship for each ESG pillar and its corresponding SDGs individually. Design/methodology/approach: Conducted in Italy, the analysis involves manual collection of non-financial disclosures from company websites (2019–2022), followed by textual analysis to identify SDG-related content. Financial and non-financial data from the LSEG Database are utilized for regression analysis on panel data. Findings: Results show that referencing to the SDGs framework in their reporting, companies can achieve better sustainability performance, thus providing support for the “talking to walk” formative view of sustainability communication, according to which talking about sustainability can lead to sustainability performance improvements. The results confirm this relationship for both environmental performance (in relation to environment-focused SDGs) and social performance (in relation to socially focused SDGs). On the contrary, referencing to governance-related SDGs does not translate into better governance performance. Originality/value: This study adopts the “talking to walk” formative view of sustainability reporting, according to which sustainability communication can significantly influence how sustainability is implemented in corporate practices. Although some progress has been made in understanding the factors that drive firms’ engagement in the sustainability journey, only few studies investigated how companies shape their sustainability talk and subsequently engage with sustainability walk, especially with regards to the adoption of specific SDGs reporting framework.