Signaling sustainability: impact that learning how to report has on enrollment, endowment and emissions of North American higher education institutions

Purpose - The purpose of this paper is to develop an integrated model assessing the frequency and timing between reports on the Association for the Advancement of Sustainability in Higher Education (AASHE) Sustainability Tracking, Assessment and Rating System (STARS) reporting the framework by higher education institutions (HEIs) and the relationship between the STARS score and reputation (enrollment), finances (endowment) and performance (emissions). Design/methodology/approach - The development of the theoretical model is based on learning, signaling and legitimacy theories. This study collects data from the AASHE STARS to indicate the rating level of 202 HEIs, control variables, enrollment, endowments and emissions. The hypotheses were tested using generalized linear models. Findings - Findings suggest that as HEIs report on their sustainability activity, they learn to report better but that there is also an “un-learning” aspect if the HEI skips reporting in a period. The results support the main hypothesis that there is a relationship between reporting and engagement with the HEIs in the form of enrollment and endowments. Finally, the findings provide evidence that the HEIs’ reporting is associated with a reduction in emissions. Practical implications - The findings suggest that HEIs should develop a reporting strategy on a standardized framework such as AASHE STARs and they ought to codify the approach to learn from prior reporting. Students and alumni are increasingly seeking to engage the HEI in the sustainability process and the report is a mechanism for signaling activities. Social implications - The findings suggest that AASHE STARS scores may be used by HEIs as a signaling mechanism to stakeholders of their commitment to sustainability. The signal is a mechanism to reduce information asymmetry between the HEI and stakeholders who may want more information on the institution’s attempts toward sustainability but lack access to information. Further, HEI partners have a mechanism to assess the overall level of commitment of the HEI toward sustainability and can, therefore, engage accordingly. Originality/value - There has been significant work on signaling theory and sustainability. However, the relationship between STARs reporting as a signal that legitimates the HEI, learning how to report well and HEI performance has received less attention. The current study demonstrates that the STARS framework as a reporting mechanism signals the HEIs’ level of commitment to sustainability thereby legitimating it resulting in improved performance.