The impact of COVID-19 on sustainability reporting: A perspective from the US financial institutions

Purpose - This article provides the first empirical study on the effects of the COVID-19 pandemic on sustainability reporting in US financial institutions using institutional, stakeholder and legitimacy theories. Design/methodology/approach - The study used the independent samplet-test and Mann–Whitney U test throughout as well as OLS, random effects, fixed effects and heteroskedasticity corrected model to test the impact of the COVID-19 pandemic on sustainability reporting in the US financial sector. A sample from all listed US financial firms was used after controlling for both the Refinitiv Eikon sector classification and the NAICS sector classification. Findings - Using U Mann–Whitney test and independent samplet-test the study revealed that the average ESG score for the pre-COVID19 period is 53% compared with 62.3% for the COVID-19 period, indicating that the sustainability reporting during COVID-19 is much higher compared with the pre-pandemic period. The findings of regression analysis also confirm that the US financial companies increased their sustainability reporting during the COVID-19 pandemic. Research limitations/implications - This study is an early attempt to look at how the COVID-19 epidemic has affected financial reporting procedures, although it is focused only on one area and other entity-related factors like stock market implications, company governance, internal audit practice, etc could have been considered. Practical implications - This research offers useful recommendations for policymakers to create standards for regulators on the significance of raising sustainability awareness. The findings are crucial for accounting regulators as they work to implement COVID-19 and enforce required integrated reporting rules and regulations. Originality/value - The study provides the first empirical evidence on the impact of the COVID-19 pandemic on sustainability reporting, by examining how US financial institutions approach the topic of sustainability during the COVID-19 pandemic and assessing the pandemic's current consequences on sustainability.