A country's culture and reporting of sustainability practices in energy industries: does a corporate sustainability committee matter?

Energy industries (electricity, renewable energy, oil and gas, consumable fuels) are environmentally sensitive due to production processes and environmental impacts. Firms in these industries face regulatory and stakeholder pressures and opportunities to contribute to UN SDGs. Prior evidence documents high carbon emissions and environmentally sensitive activities among energy firms. The literature highlights the importance of both external national culture and internal governance (e.g., sustainability committees) in shaping corporate sustainability outcomes. However, how national culture impacts sustainability performance reporting in energy firms remains underexplored, and prior work has largely overlooked the role of sustainability committees in supporting sustainability reporting. This study addresses two research questions: (1) Do and to what extent do national culture dimensions impact reporting of sustainability practices by firms operating in energy industries? (2) Does the existence of a corporate sustainability committee moderate the association between national culture and sustainability reporting? Motivations include: (i) a gap regarding drivers of sustainability reporting in environmentally sensitive energy industries; (ii) inconclusive evidence on the impact of cultural dimensions on corporate disclosure (SR/CSR); and (iii) limited attention to the importance of specialized sustainability committees in governance and their potential to enhance sustainability-related activities and reporting. The study contributes by focusing on energy industries, adopting a holistic set of national culture dimensions (Individualism, Power Distance, Uncertainty Avoidance, Masculinity, Indulgence, Long-Term Orientation), and examining the moderating role of corporate sustainability committees. The rest of the paper presents the theoretical framework, research design, results, and conclusions.

The theoretical framing draws on institutional perspectives (old and new institutional economics) emphasizing that informal institutions—such as culture, norms, and religion—shape behaviors and organizational actions. National culture is conceptualized as shared values, norms, and beliefs inherited and prevailing within a society (Hofstede; GLOBE). In accounting and disclosure research, Hofstede’s and GLOBE cultural dimensions have been widely used. Prior studies show national culture affects various corporate disclosures and practices: firm-level disclosure (Hope, 2003), internal control disclosure (Hooghiemstra et al., 2015), carbon disclosure propensity (Luo & Tang, 2016), corporate sustainability practices (Ogundajo et al., 2022), integrated reporting quality and assurance (Vitolla et al., 2019; Uyar et al., 2022), and the relationship between culture and sustainable development (Piwowar-Sulej, 2022). Evidence is mixed and often context-dependent, suggesting sensitivity to stakeholder pressures and environmental contexts. In sustainability reporting (SR), growth has been substantial globally (KPMG 2020, 2022), but concerns remain about comparability and informational quality, especially in voluntary regimes. Research attention has shifted from determinants of mandatory disclosure to motivations for voluntary SR, including signaling versus greenwashing. Stakeholder and legitimacy theories position SR as a communication process to address stakeholder and institutional pressures. Based on these theories and mixed empirical findings, the paper hypothesizes: H1, country culture influences sustainability reporting by energy firms; and H2, a firm-level sustainability committee moderates (strengthens) the relationship between national culture and sustainability reporting by enhancing integrated thinking and aligning practices with cultural contexts.

Design and sample: Panel dataset of energy industry firms (oil and gas, electricity, renewable energy, consumable fuels) across 18 countries from 2010–2019. The sample comprises 1,978 firm-year observations. The US (44.19%) and Canada (23.05%) represent the largest shares, with additional observations from European countries and the UK. Variables: Dependent variable is Sustainability Reporting Score (SRS), measured by Bloomberg ESG disclosure score (combining E, S, and G disclosure indicators). Key independent variable is a composite national culture index constructed from six Hofstede dimensions: Power Distance, Individualism, Masculinity, Uncertainty Avoidance, Long-Term Orientation, and Indulgence. The composite culture score is computed to reflect higher power distance, lower individualism, higher masculinity, higher uncertainty avoidance, higher long-term orientation, and lower indulgence as higher index values. Moderating variable is Sustainability Committee (SCS), a dummy equal to 1 if the firm has a sustainability committee, 0 otherwise. Controls include firm size (ln market capitalization), leverage (debt ratio), investment opportunities (ln capital expenditure). Sensitivity analyses additionally control for country-level GDP growth rate and population growth rate. Modeling approach: Given the longitudinal nature and repeated measures, Linear Mixed Models (LMM) are used rather than OLS to account for serial correlation and random effects at the country level. Models include random intercepts and slopes for time by country and allow for higher-order polynomial time trends (e.g., quadratic) to capture non-linear trajectories in SRS. Model selection employs backward stepwise procedures and comparisons using Akaike’s Information Criterion (AIC). Estimation uses Restricted Maximum Likelihood (REML). Variance-covariance structures are examined for best fit. Diagnostics include residual analysis and hypothesis testing. Implementation is via the nlme package in R (lme function). Main models: (1) SRS as a function of time (and polynomial terms), national culture index, SCS, and controls, with random intercepts/slopes at country level. (2) Adds the interaction term Culture × SCS to test moderation (H2). Robustness checks include: adding GDP and population growth rates; and re-estimating models after excluding US and Canada to assess whether results are driven by these large subsamples.

Descriptive and correlations: Average SRS shows non-linear growth over time, accelerating after 2015; SCS also increases over time. Pairwise correlations show SRS is positively correlated with the culture index (0.155*, p<0.01) and strongly with SCS (0.761***). SRS is negatively correlated with Individualism (-0.071**) and Indulgence (-0.108**). Control variables such as firm size and investment opportunities correlate positively with SRS; leverage is negatively related. Model [1] (main effects): The culture index is positively associated with SRS (e.g., β≈0.61, p<0.001), supporting H1 that country culture influences sustainability reporting in energy firms. SCS is also positively associated with SRS (e.g., β≈0.61, p<0.001), indicating firms with a sustainability committee disclose more sustainability information. Among individual culture dimensions (entered separately), Power Distance shows a significant positive effect on SRS (β≈0.24, p<0.01). Control variables: firm size (β≈2.82, p<0.001) and investment opportunities (β≈3.62, p<0.001) are positive and significant. Random effects indicate significant between-country differences in baseline SRS and growth rates, implying heterogeneity across countries. Model [2] (moderation): The interaction Culture × SCS is positive and significant (β≈0.004, p<0.001), supporting H2. This indicates that the presence of a sustainability committee strengthens the positive relationship between national culture (as captured by the composite index) and sustainability reporting, yielding higher SRS when SCS=1. Robustness: Adding GDP and population growth rates yields qualitatively similar results: culture index remains positively related to SRS; the Culture × SCS interaction is positive and significant (β≈0.004). GDP growth rate positively relates to SRS; population growth rate is insignificant. Excluding US and Canada produces results similar in direction and significance (though with smaller magnitudes), suggesting findings are not driven by those subsamples. Overall inference: Energy firms in countries characterized by higher power distance, lower individualism, higher masculinity, higher uncertainty avoidance, higher long-term orientation, and lower indulgence report more sustainability information. The existence of a sustainability committee enhances this culture–reporting linkage.

The findings directly address the research questions. First, national cultural dimensions are consequential for sustainability reporting in energy industries, consistent with institutional, stakeholder, and legitimacy theories that posit firms respond to informal institutional pressures and stakeholder expectations embedded in culture. The positive association between the composite culture index and SRS, and the specific positive effect of Power Distance, suggest that in cultural contexts emphasizing hierarchy, uncertainty control, long-term orientation, and restraint, firms disclose more on sustainability, possibly to align with societal expectations and to maintain legitimacy. Second, the moderating role of the sustainability committee indicates that internal governance structures can translate cultural pressures into enhanced reporting practices. A dedicated sustainability committee likely facilitates integrated thinking, coordination, and alignment with both local cultural norms and global reporting standards, thereby strengthening the culture–reporting relationship. These results contribute to reconciling mixed evidence in prior literature by focusing on environmentally sensitive energy industries and by adopting a holistic culture measure. The significant random effects underscore that cross-country heterogeneity matters; a one-size-fits-all approach to sustainability reporting is unlikely to be optimal. The positive influence of firm size and investment opportunities suggests resource availability and strategic investment are also important drivers of SR.

This study demonstrates that national cultural dimensions significantly shape sustainability reporting practices among energy firms and that a corporate sustainability committee strengthens this relationship. Using a decade-long, multi-country panel and linear mixed models, the study shows that higher power distance, lower individualism, higher masculinity, higher uncertainty avoidance, higher long-term orientation, and lower indulgence are associated with higher levels of sustainability disclosure. The presence of a sustainability committee enhances the positive impact of culture on reporting. Implications: Firms should tailor sustainability reporting strategies to cultural contexts and consider establishing specialized sustainability committees to navigate cultural complexities and align with stakeholder expectations and global standards. Policymakers should incorporate cultural considerations into guidance to foster effective and meaningful sustainability reporting. Future research: Extend cultural constructs beyond Hofstede’s six dimensions (e.g., religious culture, Confucian culture, social trust, innovation culture), explore additional sectors and time periods, and examine mechanisms by which committees influence reporting quality and assurance.

The study focuses on energy industries and 18 countries over 2010–2019, which may limit generalizability beyond this sector and period. The sample is unevenly distributed across countries (dominated by US and Canada), although robustness checks excluding these countries yield similar results. Sustainability reporting is measured using Bloomberg ESG disclosure scores, which, like other voluntary disclosure measures, may face comparability and quality limitations. Cultural influences are operationalized using six Hofstede dimensions; other cultural constructs are not examined. The dataset is not publicly available at present, which may constrain external replication until data are shared.