The Value Contribution of Sustainability Reporting - an empirical Evidence for Real Estate Companies

Sustainability has evolved to one of the major challenges for society and business world. This changing perception over the past two decades resulted in increased requirements for corporate sustainability. In order to meet stakeholders' informational desires the documentation of the corporate contribution to sustainability becomes an important aspect of companies' stakeholder communication. Especially the real estate industry bears high responsibility since this branch is assumed to be one of the major triggers of the anthropogenic climate change and resource exploitation making sustainable corporate management and the communication thereof inevitable. The Global Reporting Initiative (GRI) as the leading authority in sustainability reporting published a globally recognized common framework in order to ensure the comparability and standardization of corporate sustainability reporting. This paper analyses for the first time whether sustainability reporting has an influence on the stock prices of real estate companies. Using the methodology of event study, the research for a global sample (Europe, USA and Australia) shows a clear positive impact. Thus, sustainability and the communication thereof have an impact on corporate valuation, making efforts to promote corporate sustainability not stamped as altruism. In fact, sustainability is of decision relevance for shareholder and investors and therefore a success factor for companies. The results of this study provide the empirical evidence for listed real estate companies.