Sustainability reporting and financial performance relationship: An application in the BIST manufacturing industry sector

The report titled Our Common Future laid the foundations for the concept of sustainability, defining it as "development that meets the needs of the present without compromising the ability of future generations to meet their own needs." Sustainability is about thinking about the future and living by acting with the future in mind. The concept of sustainability is multifaceted, encompassing economic, environmental, and social dimensions. Social sustainability is based on an approach that treats individuals with equality and respect. This study uses the standards published by the Global Reporting Initiative (GRI). GRI Standards are divided into three main categories: universal, topic-specific, and sector standards. One of the subheadings of the Topic-Specific Standards is the GRI 400 Social Issues Standards Series. The GRI 400 Social Standards Series consists of 17 main headings and 36 subheadings. This study compares the financial performance of 31 companies operating in the BIST manufacturing industry sector between 2019 and 2023 and included in the BIST Sustainability Index with 31 companies not included in the sustainability index. The companies' inclusion in the sustainability index was considered the independent variable, while the current ratio, cash ratio, financial leverage ratio, asset turnover ratio, inventory turnover ratio, receivables turnover ratio, asset profitability, return on equity, gross profit margin, net profit margin, market value/book value, and overall financial performance were considered dependent variables. Within this scope, 12 hypotheses were developed, and the Independent Samples T Test and Mann Whitney U Test were used to test the validity of the hypotheses. Additionally, the companies' disclosures under the GRI 400 Social Issues Standard Series were examined using content analysis. According to the results obtained, the most frequently disclosed standards in corporate social sustainability reports are, in order: GRI 404 Education and Training Standard, GRI 403 Occupational Health and Safety Standard, GRI 405 Diversity and Equal Opportunity Standard, GRI 401 Employment Standard, and GRI 406 Non-Discrimination Standard. No significant differences were found between companies' inclusion in the sustainability index and their current ratios, asset turnover ratios, gross profit margins, and market value/book value ratios. On the other hand, statistically significant differences were found between inclusion in the sustainability index and cash ratios, financial leverage ratios, inventory turnover rates, receivables turnover rates, return on assets, return on equity, net profit margins, and overall financial performance.