Integrating sustainability reporting into enterprise risk management and its relationship with business performance: A conceptual framework

This paper conceptualises a framework that examines the moderating effect of sustainability reporting
practices on the relationship between enterprise risk management (ERM) implementation and business
performance. Business performance is proxied through a value-added measurement technique, namely
the economic value added (EVA). An Effective ERM adoption has a significant positive impact on businesses' overall performance. However, there are limited studies conducted on ERM implementation and
how sustainability reporting could influence organisations' performance through ERM. Many business
organisations globally do not incorporate sustainability initiatives within their corporate strategy,
whereas they should be critical input for strategic management and corporate planning. By combining
the Stakeholders Theory and the Modern Portfolio Theory, this study integrates ERM implementation
with sustainability reporting to examine their effect on business performance's economic value added.
This paper proposes a quantitative content analysis of the of the annual reports to obtain information
about companies' enterprise risk management practices and sustainability reporting. While secondary
data related to the economic value added (EVA) measurement will be extracted from Thomson Reuters
DataStream. The paper proposes ordinary least square (OLS) for the proposed analysis. The conceptual
model espoused by this study will provide insights in formulating strategies and serve as an important
conduit to enhance the EVA performance especially of the oil and gas companies. The EVA performance
can be achieved through the improvement of price to earnings ratios and the reduction of cost of capital
by reducing information asymmetry among the business, the insurance companies, the lenders and the
shareholders of the company.