Introduction

Energy industries such as electricity, renewable energy, and consumable fuels like oil and gas are considered environmentally sensitive due to their production processes, business operations, and environmental impacts (Naeem et al., 2022). Recognizing these industries’ significance and potential environmental implications is essential in developing effective strategies and initiatives to promote sustainable practices, minimize adverse impacts, and foster a harmonious balance between economic growth and environmental conservation. Energy firms have incentives to prioritize sustainability, such as complying with an increasing number of environmental regulations, facing pressure from stakeholders, and wishing to do what is appropriate for the future of our planet. They have the chance to participate in achieving the United Nations Sustainable Development Goals (UN-SDGs), whether through improving their positive contributions or by mitigating or avoiding their harmful impacts. Energy production can enhance social and economic development by providing access to cheap energy (UN-SDG # 7), increased revenues, opportunities for employment, development of business and skills, and developed infrastructure (UN-SDG # 9). Several studies reported higher levels of carbon emission and anti-environmental activities in companies operating in the energy industries (Pinheiro et al., 2023; Nimer et al., 2024).

The literature supports the notion that understanding how both the external country’s culture and internal sustainability committee affect corporate sustainability performance and offer valued insights for companies to support environmental stewardship and sustainable business practices (Lu and Wang, 2021). The country’s culture, as they were identified by Hofseted (1983) or GLOBE (2004), is built in a society based on a country or region’s norms, religions, regulations, habits, education, traditions, and all factors that contribute in influencing the behavior of that society. Since the beginning of the current century, research related to the nexus of a country’s culture, sustainability reporting (SR), and corporate social responsibility (CSR) disclosure have increased immensely. Since Ho and Wong (2001) highlighted the need for further evaluation and investigation into the impact of a country’s culture and CSR and SR disclosure, literature investigated the association between cultural dimensions and corporate disclosure (Hope 2003; Yamen et al., 2018; Uyar et al., 2019; Pinheiro et al., 2023; Hassanein and Abou-El-Sood, 2022; Hassanein and Hussainey, 2015; Hassanein et al., 2019). However, how national culture impacts the reporting of sustainability performance and practices of energy firms is largely unexplored. Besides, the sustainability committee is an essential governance mechanism at the firm level (Khan et al., 2023). It manages corporate social and environmental performance (Orazalin, 2020). Notably, previous literature has overlooked how sustainability committees support the reporting of sustainability practices, which this paper aims to investigate.

The aim of this study is to address two research questions. The first is whether and to what extent do country culture dimensions impact the reporting of sustainability practices of firms operating in the energy industries? Second, does the existence of a committee for corporate sustainability moderate the association between country culture and reporting sustainability practices? The study is motivated by the following. First, there is a gap in the literature of research that examines the drivers of sustainability reporting in energy industries (Nimer et al., 2024). Energy industries are considered environmentally sensitive due to their production processes, business operations, and environmental impacts, which are crucial in ensuring sustainability (Fujii and Managi, 2015). Therefore, this study underscores the unique sustainability challenges for firms operating within energy industries. Second, prior studies conclude that the shreds of evidence about the impact of a country’s cultural dimensions on corporate disclosure, such as SR and CSR disclosures, are not inclusive, and there is a space for more research to cover more research topics. Therefore, this study tries to address this research gap and examines how a country’s culture shapes reporting sustainability practices for firms operating in the energy industry. Third, prior studies overlooked the importance of a corporate sustainability committee or unit for corporate sustainability. The sustainability committee is a crucial instrument within the governance mechanism (Khan et al., 2023), which plays a vital role in overseeing and enhancing sustainability-related activities (Hussain et al., 2018; Bifulco et al., 2023) and helps corporations derive value from these activities (Khan et al., 2023). Thus, this study explores the significance of a sustainability unit or committee by exploring its moderating role in the nexus between country culture dimensions and SR within the energy industries.

The study adds to the literature from different angles as follows. First, it focuses on environmentally sensitive industries (i.e., the energy industries), providing more focused analyses of reporting sustainability performance within a specific industrial context. This industry-specific focus enables a deeper understanding of how country culture affects reporting sustainability practices for firms operating within the unique context of the energy industries, where environmental concerns and regulatory pressures are particularly pronounced. Second, the study uses different dimensions of the country’s culture: Individualism, Power distance, Uncertainty avoidance, Masculinity, Indulgence, and Long-term orientation. The current study offers a holistic perspective of how national cultural dimensions influence the reporting of sustainability practices in the energy industries. The findings of our study reveal that energy firms dissimilate higher levels of sustainability information when they operate in a country with a lower Individualism, higher power distance, higher uncertainty avoidance, higher Masculinity, lower Indulgence, and higher long-term orientation, and vice versa. Finally, the study is among the first studies to examine the moderating role of a specialized corporate sustainability committee in enhancing the reporting of sustainability practices. The results suggest that a corporate sustainability unit or committee can act as a mechanism for aligning and adapting sustainability reporting practices to the specific cultural context in which a firm operates.

The rest of the study proceeds as follows. The second section explains the theoretical framework. The third section presents the research design. The fourth section discusses the results, and the last section concludes.

Theoretical framework

Country’s culture

The new institutional economics suggests that informal institutions, such as culture, impact human behaviors and perceptions (Li et al., 2019; Trinh et al., 2023). Therefore, introducing innovations, technology, or systems leads to a new prospect that requires social acceptance and cultural changes (Aririguzoh, 2022; Yigitcanlar et al., 2023; Noman et al., 2023). Accordingly, accepting an innovation or system relies heavily on the cultural values or what is known as the “country’s culture” or “regional culture” that is dominant in a particular society. A country’s culture donates a set of values that are inherited, shaped, and prevailing within a specific group or geographical area (Guiso et al., 2008; Mao et al., 2024). It is also defined as beliefs, values, norms, and common motives and identities that are produced from shared experiences within a group and are inherited through generations (House et al., 2002). These concepts are usually hypothesized by identifying various cultural dimensions (Nowak, 2016). The GLOBE and the Hofstede models are the most commonly used models in accounting studies. A country’s cultural dimensions have been central to business research for decades.

Hope (2003) examined the impact of a national culture on firm-level disclosure. The results have shown that legal origin and a country’s cultural dimensions are essential factors in determining firm-level reporting. Also, Hooghemistra et al. (2015) investigated the impact of a country’s cultural dimensions on internal control disclosure. Their findings suggested that a national culture directly influences corporate disclosure and indirectly affects investor protection. Similarly, Luo, Tang (2016) examined the impact of a country’s culture on the disclosure of corporate carbon propensity. They indicated that there is a significant association between masculinity, power distance, and uncertainty avoidance with the propensity of carbon disclosure. Recent studies also examined the influence of a country’s culture on several business practices. For example, Sun et al. (2023) reported that corporate sustainability is enhanced by a cultural insertion in top managers’ hometowns ominously. Based on this, they concluded that executives can transfer cultural inclusion in society. Ogundajo et al. (2022) investigated the impact of the governance factors at the country level and the country’s cultural dimensions on practices of corporate sustainability across 36 countries from 2011 to 2020. The results suggested that the rule of law is the only governance factor that promotes corporate sustainability practices, and all countries’ cultural dimensions are positively related to corporate sustainability practices except power distance and masculinity. Finally, Piwowar-Sulej (2022) provided comprehensive, structured literature about the relationship between a country’s culture and sustainable development.

Based on this, this paper examined the effect of a country’s cultural dimensions, as identified by Hofstede et al. (2010) and Hope (2003) on sustainability reporting in the energy industry. These dimensions were chosen for several reasons. First, many of the cultural differences are out of the context of this study, such as gambling culture, food culture, and social trust (Mao et al., 2024). Second, these are the dimensions that have been examined in most of the previous studies within the context of sustainability reporting. Third, we choose the cultural dimensions that have the highest available data for these countries and for the energy sector in particular. Finally, uncertainty avoidance, long-term orientation, power distance, Individualism, Masculinity, and Indulgence are expected to create institutional differences between different countries and regions and, consequently, influence the sustainability reporting behavior of energy companies in these countries.

Sustainability reporting

Although SR, CSRR, and integrated reporting (IR) have been increasing in the previous couple of decades, they are still in their early phases of being compared with the level of mandatory disclosure required by the accounting standards (Benameur et al., 2024). Tschopp and Huefner (2015) compared the development of CSR disclosure and financial disclosure, and their results suggested that although CSR reporting has improved significantly compared to the early stages reports, there is a lack of comparability and relevance. Some researchers criticized sustainability reporting because voluntary disclosure does not improve the quality of information disclosed (Michelon et al., 2015). However, stakeholders’ demand for SR is growing significantly (Bonsón, Bednárová, 2015). According to the KPMG survey (2020), 80% of companies all over the world and 90% of companies in the North America have a certain level of sustainability reporting. Besides, by comparing the 2020 reporting to the 2022 reporting, KPMG (2022) provided an analysis of the progress made in SR. Their findings reported that Asian companies witnessed enormous improvement. The findings also revealed that 96% of the largest 250 companies (G250) have SR.

With the massive increase in CSR and sustainability practices by companies, researchers have concentrated more on the effect of CSR practices on companies, employees, and customers. Ma et al. (2024) examined the impact of CSR on the level of stress among employees in the hospitality industry in China, focusing on wellbeing as a vital motive of achievement and its association with the UN sustainable development goals. Also, Sun et al. (2020) examined the influence of employee quality, proxied by the level of education of the workforce, on the CSR practices in the listed firms in China. The empirical outcomes indicate that higher educational levels can endorse CSR implementation. This increase in the CSR and sustainability practices research synchronized by the shift of the accounting researcher from examining the determinants of compulsory disclosure (Abdelqader et al., 2021) to being more focused on firms’ motivations for voluntary disclosures such as sustainability reporting (Alazzani et al., 2017; Elsayed and Hassanein, 2023; Ramadan et al., 2023; Hassanein, 2022a; Hassanein, 2022b; Benameur et al., 2023; Hassanein and Tharwat, 2024; Hassanein and Elsayed, 2021). Several factors have been discussed and investigated as motivations for companies’ sustainability reporting. However, the two main motivations at the center of research interest were Signaling and Greenwashing (Mahoney et al., 2013). Based on the signaling approach, firms endeavor to utilize sustainability reporting to underscore their commitments to social and environmental activities. As the greenwashing approach suggests, firms attempt to reflect a good impression.

Firms worldwide strive to disclose sustainability information, whether the motivations behind sustainability reporting are responding to stakeholder and social requirements, legitimization, or greenwashing. Therefore, this research explores whether variances in a country’s culture between countries would impact the level of SR in firms operating in the energy industries. Besides, we examine whether the corporate sustainability committee would strengthen the association between the country’s culture and sustainability reporting.

Hypotheses development

The legitimacy theory and stakeholders’ theory have been expansively employed in environmental disclosure practices as a justification to alleviate the pressure of specific stakeholder groups (Uyar, 2017; Uyar et al., 2019; Yu and Zheng, 2020). The stakeholder and legitimacy theories acknowledge that sustainability reporting is a shifting paradigm from financial and non-financial disclosure to a communication process between companies and their stakeholders (Uyar et al., 2019; Uyar et al., 2022). As Milne and Patten (2002) discussed, companies try to protect their legitimacy to alleviate institutional pressures.

The institutional perspective, both the old and institutional theories (North, 1990), suggests that different formal and informal institutions influence an individual’s behavior in a society. While the first includes the regulatory environment and governance, the latter includes habits, traditions, norms, culture, and religions. However, Shotter (1981) stated that habits do not play a leading role in human behavior according to the new institutional theory as in the old institutionalism. However, institutions are nevertheless still viewed as general regularities in social behavior. In addition, North (1990, p. 3) looked at institutions from different perspectives when he defined them as “a result of the humanly devised limitations that form human interaction”. Based on this, we can conclude that the new and old institutionalism encompass formal organizations, such as governments, universities, banks, and corporations, and incorporated social entities, such as religion, norms, money, culture, language, and law.

Therefore, the country’s cultural dimensions, including Masculinity, uncertainty avoidance, power distance, Individualism, Indulgence, and a long-term orientation, represent informal institutions that are expected to affect and sharpen the management behavior of companies (Li et al., 2019; Ramadan et al., 2023). In the following section, we highlight the expected association between national culture and SR.

country’s culture and sustainability reporting

Although the association between the country’s culture and business practices has been investigated for decades, the gaps in this research area are always there due to the continuous development of business practices and cultural values (Hrasky, 2012; Li et al., 2019; Hassanein et al., 2024). Besides, the continuous development of corporate reporting created more gaps for more research regarding the consequences of national culture on compulsory and voluntary disclosures. The influence of a country’s culture on accounting practice and compulsory disclosure has been documented in several studies at the country and firm levels (Khlif, 2016; Luo, Tang (2016); Hooghemistra et al., 2015; Taskumis, 2007; Hope, 2003; Ho and Wong, 2001). However, the empirical evidence is still far from conclusive.

Theoretically, stakeholders within different regions have diverse “collective programming of the mind” (Hofstede, 1983). Based on that, social behaviors and administrative actions can be explained based on the dominant culture (Gallego-Álvarez and Ortas, 2017). Uyar et al. (2022) investigated the role of a country’s culture on integrated reporting assurance. They expected to find similar reporting practices in countries with similar cultural values. Their expectations were built according to the argument of Roy and Goll (2014) and Gallego-Álvarez (2017), which stated that companies working in countries with similar cultural values are anticipated to act similarly. Vitolla et al. (2019) adopted the “Integrated Thinking” concept that was presented by the International Integrated Reporting Council (IIRC), which could be encompassed under the institutional theory. Integrated thinking can be explained through the consideration by an organization of the associations between the organization’s capital and its functional units and various operating systems. Integrated thinking, based on this, will lead to integration in decision‐making and actions that consider value creation. Integrated thinking as an institution in a particular society could impact organizational behavior and lead to evaluating the conjunction of interest among key stakeholders. According to Vitolla et al. (2019), the more a company can implement integrated thinking into its activities, the easier it can apply information connectivity concepts in decision‐making and analysis.

At the empirical level, several studies examined the influence of a country’s cultural dimensions on CSRR and SR. Nowak (2016) presented an explanation of how culture can impact accounting. He concluded that the concept of culture can be operationalized despite its ambiguity. Therefore, cultural variables can be quantitatively measured and, consequently, can be examined within different accounting concepts. Luo, Tang (2016) suggested that power distance, uncertainty avoidance, and masculinity significantly influenced carbon disclosure tendencies. Gallego-Álvarez and Ortas (2017) found that various countries’ cultural dimensions have a random influence on CSR practices in corporations. They attributed these results to the high sensitivity of corporate sustainability behavior to the demand and pressure created by different stakeholders. This pressure is subject to cultural and environmental considerations. Vitolla et al. (2019) employed stakeholder theory to investigate the impact of national culture on integrated reporting quality. Their results indicated that integrated reporting quality is significantly associated with five national cultural dimensions: Individualism, power distance, Indulgence, uncertainty avoidance, and masculinity. Within the same context, Uyar et al. (2022) and Vitolla et al. (2019) employed the stakeholder, social contract, neo-institutional, and contingency theories to suggest that companies operating in countries with high collectivism among people, strong feminine values, low power distance, pursuance of short-term goals, high uncertainty avoidance, and low level of Indulgence have a higher tendency to ensure their integrated reports.

According to the above theoretical debate and the empirical evidence reported in these studies, we can argue that the country’s national cultural dimensions affect the level of sustainability reporting for energy sector companies. The level of sustainability reporting is likely to differ among countries based on the different dominant cultures. Therefore, we formulate the following hypotheses.

H1: The Country’s culture influences the reporting of sustainability practices of energy firms

The moderation effect of the sustainability committee

As institutional theories indicate, informal institutions such as culture, norms, and religions influence human behavior and affect organizational actions (Shotter, 1980; North, 1990). As part of the informal institutions, national cultures are expected to influence companies’ behaviors (Uyar et al., 2022). In addition, if reporting sustainability practices became formal and organized at the organizational level, this would strengthen the intersection between the country’s culture and sustainability reporting. Moreover, the sustainability committee is an essential governance mechanism at the firm level (Khan et al., 2023). It manages corporate social and environmental performance (Orazalin, 2020). It also plays a vital role in overseeing and enhancing sustainability-related activities (Hussain et al., 2018; Bifulco et al., 2023) and helps firms derive value from these activities (Khan et al., 2023). In support, a sustainability committee in a company would enhance the idea of integrated thinking, as presented by Vitolla et al. (2019).

Sun et al. (2020) examined how other factors could impact CSR and sustainability practices. Their study investigated the influence of the employees’ quality on CSR practices in China. The level of education was used as a proxy for the employees’ quality and was found to have a high impact on CSR practices. Therefore, the composition of the CSR committee should consider these variables in order to have the required moderating effect on the association between the national culture and CSR and sustainability reporting.

Therefore, we argue that a sustainability committee in an organization would enhance integrated thinking and work as a formal institution that strengthens the relationship between national culture and sustainability reporting practices. Therefore, our second hypothesis is related to the moderation effect on the sustainability committee and is formalized as follows:

H2: The sustainability committee moderates the relationship between the country’s culture and sustainability reporting in energy firms

Research design

Sample and variables

The study encompasses a dataset of firms operating within the energy industries over a decade from 2010 to 2019. Notably, the study focuses on the following energy industries: oil and gas, electricity, renewable energy, and consumable fuels. The sample comprises 1978 firms, and these firms are distributed across 18 countries. The distribution of the sample observations over the years and countries is presented in Table 1. Notably, most energy firms in the dataset are US-based companies, accounting for 44.19%. Canada follows at a considerable distance, representing 23.05% of the firms. The UK accounts for 6.17% of the total energy firms worldwide. Additionally, Belgium, Denmark, Finland, Luxembourg, and Portugal each contribute approximately 1% of the energy firms in the sample.

Table 1 Sample.
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The study concentrated on three main variables and a set of control variables, as follows.

The sustainability reporting score

The sustainability reporting score (hereafter, SRS) is a firm’s Bloomberg ESG disclosure score that combines the following indicators: (i) environment disclosure (E), (ii) social disclosure (S), and (iii) corporate governance disclosure (G).

The country’s culture

This study utilizes six cultural dimension scores: power distance, Individualism, Masculinity, uncertainty avoidance, long-term orientation, and Indulgence. The first four dimensions were introduced by (Hofstede and Bond, 1984; Hofstede, 2001) and updated by Hofstede et al. (2010) and Hope (2003), while the remaining two are derived from the research conducted by Hofstede et al. (2010). Table 2 provides a comprehensive definition of each dimension. These dimensions are aggregated to create a composite cultural Index score for each country under consideration, reflecting the nuanced interplay of cultural attributes. Remarkably, the score of national culture in each country is the country score of its Power distance plus 100 minus the score of Individualism plus the score of masculinity plus the score of Uncertainty avoidance plus the score of Long-term orientation plus 100 minus the score of Indulgence. A higher national culture score reveals that the firm is operating in a country with a higher degree of power distance, a lower degree of Individualism, a higher degree of masculinity, a higher degree of uncertainty avoidance, a higher degree of long-term orientation, and lower degree of Indulgence and vice versa.

Table 2 Definitions and measurements of variables.
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Sustainability committee score

The sustainability committee is a dummy variable that equals one if the company has a committee for sustainability and Zero otherwise.

Control variables

The study controls for some firm and country characteristics that affect the SRS, including firm size, leverage, investment opportunities, GDP, and population growth rates. Table 2 lists the variables and their definitions.

Linear mixed model (LMM)

Due to the longitudinal nature of the SRS measurements, ordinary least squares (OLS) models are not suitable for analyzing our panel data. The serial correlation of measurements must be taken into account when assessing the same country’s SRS over multiple periods. The data structure emerged as a result of multiple observations, and failing to consider this structure can result in model estimates that are skewed and potentially more significant Type I error values. The LMM is employed to represent our SRS. This model considers the intersection of means over time for all countries under investigation and incorporates the impacts of time-invariant variables.

The LMM is a more accurate approach than the OLS models. It takes into account the error conditions that arise from repeated measurements of simple random samples within the same country. This finding was demonstrated by (Bani-Mustafa et al., 2018). The LMM was employed to quantify the influence of culture and control variables on the SRS. Specifically, in order to evaluate our hypotheses, we created the following.

Initially, we constructed model (1) to examine H1, which investigates the impact of a nation’s culture on SRS and control variables.

$$SR{S}_{ij}={{\left({\underbrace{\beta oo}}\underline{+{\beta }_{1}{t}_{ij}+{\beta }_{2}{t}_{ij}^{2}}\right)}\atop{{\scriptstyle{Fixed\,Effects}}}}+{{\left({\underbrace{{{b}_{0i}}}}\underline{+b_{1i}t_{ij}}\right)}\atop{\scriptstyle{Random\,Effects}}}+{\beta }_{3}Cu{l}_{ij}+{\beta }_{4}S{C}_{ij}+f(Count\,Var)+{{\varepsilon }}_{ij}$$
(1)

Where: SRSij represents the sustainability reporting score for country i at time j, βoo is the overall mean of SRS, and b0i represents the deviation of the country from this mean, which follows a normal distribution \(N({b}_{0i} \sim N(0,{\sigma }_{0}^{2})\). Similarly, \({\beta }_{1}\) represents the average rate of growth or decline in SRS, while \({b}_{1i}\) represents the deviation of the country from the mean, which follows a normal distribution \(N(0,{\sigma }_{1}^{2})\). \({\epsilon }_{{ij}}\) represents the random errors for each country \(i\) at a time \(j\), which follows a normal distribution \(N\left(0,{\sigma }_{\varepsilon }^{2}\right)\). \({Cu}{l}_{{ij}}\) is the averaged culture index for each Country \(i\) and time \(j\). The \(\left[f({Cont\; Var})\right]\) is the set of all control variables in our model. The model additionally incorporated higher-order polynomial trends (i.e., quadratic) \(\left({\beta }_{2}\right)\), to examine a nonlinear growth trajectory over time and enhance the model estimation. \({\beta }_{3}\) and \({\beta }_{4}\) are the coefficients of the culture sustainability committee score, respectively.

Second, we developed model (2) to test H2, which addresses how the sustainability committee moderates the relationship between SRC and the country’s culture. In this model, we have added an interaction effect of the culture and sustainability committee score, as follows.

$$\begin{array}{l}{SR}{S}_{{ij}}=\left(\underbrace{{{{\beta }_{{oo}}+\beta }_{1}t}_{{ij}}+{{\beta }_{2}t}_{{ij}}^{2}}_{{Fixed\; Effects}}\right)+\left(\underbrace{{b}_{0i}+{b}_{1i}{t}_{{ij}}}_{{Random\; Effects}}\right)\\\qquad\qquad+\,{\beta }_{3}{{Cul}}_{{ij}}+\,{\beta }_{4}{{SC}}_{{ij}}+\,{\beta }_{5}{Cul}\,\times \,S{C}_{{ij}}+f({Cont\; Var})+{\varepsilon }_{{ij}}\end{array}$$
(2)

Where, Cul × SCij is the interaction effect of the culture and sustainability committee score and \({\beta }_{5}\) is the interaction effect coefficient.

Robustness of the model

The model incorporates higher-order components, such as quadratic and/or cubic terms, and tests them to track the behavior of the SRS over time accurately. Various error variance and covariance structures are also examined to enhance the model’s goodness of fit. Furthermore, LMM enables you to represent the intercept and linear slope in all countries as either fixed or random. The suggested model was constructed using a combination of higher-order polynomials and a random coefficient modeling framework. The explanatory variables were fitted to various variance-covariance frameworks in a stepwise manner. These are the main advantages of utilizing LMM over Ordinary OLS. Furthermore, a backward stepwise regression technique was employed to determine the significant factors and their interactions that would be included in the final model. Begin with a comprehensive model that encompasses all fixed effects (including covariate interactions) and random effects. Model comparisons were conducted by comparing the differences in Akaike’s information criterion (AIC), which is calculated as (−2 log-likelihood + 2k), using the chi-square test (p < 0.05) (Akaike, 1974). The AIC quantifies the comparative adequacy of alternative models with varying covariance patterns, where k is the number of covariance parameters. This approach seeks to determine the optimal subset of predictors by eliminating repetitive variables (Hegyi and Garamszegi, 2011). The ultimate model was fitted using Restricted Maximum Likelihood Estimation (REML) and assessed using conventional model diagnostic procedures, including residual analysis and hypothesis testing (Bani-Mustafa et al., 2019; Nimer et al., 2022). The “lme” function from the “nlme” package in RStudio 2022.12.0 (Pinheiro and Bates, 2000) was used to fit all mixed effects models.

The results

Descriptive statistics

Figures 1 and 2 show the year-wise distributions of the sustainability reporting and sustainability committee scores, respectively. They present the averages of SRS and SC scores from 2010 to 2019. They reveal that the SRS behavior over time generally increased at a faster rate after 2015. The sustainability committee score behaves almost the same over time, with an almost equal mean (37.6) and standard deviation (32.1). Figures 1 and 2 suggest that the growths in SRS and SC scores were not linear as an indicator to add a higher-order polynomial to the model.

Fig. 1
Fig. 1
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Year-wise distribution of sustainability reporting score.

Fig. 2
Fig. 2
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Year-wise distribution of sustainability committee score.

Table 3 displays the descriptive statistics for the factors analyzed in this study across 18 different countries during a period of ten years (2010–2019). The mean value of SRS for all countries is 36.12 (standard deviation = 38.7), ranging from 0 to 89.73. This range suggests variations in reporting sustainability practices among firms within all countries. Likewise, the culture within each country has an average of 38.9 with a low value of standard deviation (SD = 7.1), with not much variation among countries across years in the culture index. Furthermore, the sustainability committee score ranges from 0 to 90, averaging 40.5. Regarding the individual dimensions of the country’s culture, the power distance dimension has an average score of 40.8, while the individualism dimension has a mean value of 82.5. The average values for Masculinity, Uncertainty avoidance, Long-term orientation, and Indulgence are 53.9, 50.7, 35.3, and 64.9, respectively. The summary statistic for our control variables is likewise included in Table 3. The company’s capitalization has an average value of 682, while the debt ratio spans from 0 to 1378.8, with a mean value of 04.02. In addition, the capital expenditure of a corporation varies between 0 and 9.65, with an average value of 1.07.

Table 3 Descriptive statistics.
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Table 4 shows the pairwise Pearson coefficients between the variables. The SRS is statistically significant and positively correlated with all variables except the debt ratio, which was significant and negative. Specifically, it is positively associated with the country’s culture score (0.155**). Likewise, it significantly correlates with the sustainability committee score (0.761**). The highest correlation was with the sustainability committee. The SRC is negatively correlated with Individualism (−0.071**) and Indulgence (−0.108**), suggesting that firms operating in countries with higher individualism and indulgence cultures exhibit less reporting of sustainability practices. Furthermore, the control variables were correlated with each other and with SRS and SCS. High correlations between variables can lead to multicollinearity in regression analysis. However, this issue can be managed by monitoring the Variance Inflation Factor (VIF) values and employing stepwise regression analysis. The VIF values computed for the ultimate model do not indicate any problems with collinearity for the analyses, as all VIF values are below 3 (see Table 5).

Table 4 Pearson correlation matrix.
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Table 5 Model [1] results_ Country’s culture and sustainability reporting.
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The results of LMMs and hypotheses testing

Table 5 demonstrates the results obtained from the relationships depicted in our primary models, which were used to evaluate our main hypotheses. The model [1] incorporates the culture index, sustainability committee score, and control variables to simulate the SRS. The findings from Table 5 indicate a substantial and positive intersection between the coefficient of the culture index score and SRS (β = 0.61, p < 0.1%). This suggests that when the culture index score increases, the level of SRS also increases. This outcome validates the adoption of the H1 hypothesis, which states that the culture of a country has an impact on how energy companies disclose their sustainability policies. Similarly, the coefficient of the sustainability committee score demonstrates a strong and positive correlation with the SRS (β = 0.61, p < 0.1%). The findings indicate that companies that have a sustainability committee are inclined to share their sustainability initiatives.

To further test if any cultural dimensions are significant with SRS, the cultural dimensions are included in the primary model instead of the aggregated culture index with SCS. Panel [2] of Table 5 indicates that only the Power Distance is significant and positively affects SRS. This finding reveals that companies in a country with a high-power distance culture disseminate more sustainability reporting information about their sustainability practices.

The findings are consistent with the theoretical expectation of the neo-institutional theory that firms operating in countries with similar cultural values are anticipated to act similarly within organizational fields (Roy and Goll, 2014). They also follow the same lines as some prior studies. For example, Luo, Tang (2016) indicated that power distance, uncertainty avoidance, and masculinity are significantly associated with carbon disclosure propensity using a sample of 1762 firms from 33 countries. Gallego-Álvarez and Ortas (2017) explored the impact of communities’ culture on corporate environmental SR practices. Their results suggested that various national culture dimensions negatively influence corporate sustainability reporting practices. They concluded that these results in the high sensitivity of corporate sustainability behavior to stakeholders’ pressure and demand by the cultural environment. Ogundajo et al. (2022) delve into the effect of country-level governance factors and the country’s cultural dimensions on corporate sustainability practices from 2011 to 2020. The results suggested that the rule of law is the only governance factor that promotes corporate sustainability practices, and all countries’ cultural dimensions are positively related to corporate sustainability practices except power distance and masculinity.

The findings are also consistent with other theoretical perspectives. For instance, Vitolla et al. (2019) investigated the effect of a country’s culture on integrated reporting quality from a stakeholder theory perspective. Their results indicated that integrated reporting quality is significantly associated with power distance, Individualism, Masculinity, Indulgence, and uncertainty avoidance. Vitolla et al. (2019) and Uyar et al. (2022) employed the neo-institutional, stakeholder, social contract, and contingency theories to examine the role of national culture dimensions on integrated report assurance. The study suggested that firms operating in countries with high collectivism among people, low power distance, solid feminine values, high uncertainty avoidance, pursuance of short-term goals, and low degree of Indulgence have a higher tendency to ensure their integrated reports.

Regarding control variables, the coefficient of firm size is positive and significant (β = 2.82, p < 0.1%), advocating that larger companies disclose more sustainability information. Likewise, the coefficient on capital expenditure is positive and significant (β = 3.62, p < 0.1%), revealing that firms with more investment opportunities disseminate higher levels of sustainability reporting. Moreover, the random effects for both the intercept and the slope are significant, indicating that each country has its average value of SRS and its own rate of change throughout time. Each country has its initial point in 2010 (intercept) and its own rate of growth or reduction in SRS (slope). This implies that a singular answer that is applicable to all countries could not exist.

Table 6 presents the outcomes of model [2], which addresses whether the sustainability committee affects the association between sustainability reporting and the country’s culture. In other words, it tests if the interaction effect of the sustainability committee and culture is significant. In model [2], we added the interaction effect to model [1]. The results reveal that the sustainability committee score (SCS) is 0.99 and is significant (p < 0.01%). Likewise, the interaction coefficient between the sustainability committee and the cultural index score is positive (β = 0.004, p < 0.1%). The findings show a positive effect of the interaction effect after adding it to the model [1]. This result leads to an acceptance of the H2 hypothesis that the sustainability committee moderates the relationship between the country’s culture and sustainability reporting in energy firms. The results propose that the sustainability committee increases the positive intersection between sustainability reporting and cultural index score. This means that the SRS is higher in the presence of the sustainability committee. Therefore, the sustainability committee moderates the intersection between the country’s culture and SRS, suggesting that a corporate sustainability committee can act as a mechanism for aligning and adapting sustainability reporting practices to the specific cultural context of the company.

Table 6 Model [2] results_ The moderating effect of a corporate sustainability committee.
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The observed findings align with the theoretical expectation that a specialized sustainability committee at the firm level is an essential corporate governance mechanism (Khan et al., 2023). It manages corporate social and environmental performance (Orazalin, 2020). It also plays a vital role in overseeing and enhancing sustainability-related activities (Hussain et al., 2018; Bifulco et al., 2023) and helps firms derive value from these activities (Khan et al., 2023). Besides, a sustainability committee in a company would enhance the idea of integrated thinking, as presented by Vitolla et al. (2019). Therefore, we argue that a sustainability committee at the firm level would enhance integrated thinking that strengthens the association between the country’s culture and the reporting of sustainability practices.

Additional analyses

Other country-level indicators could influence the SRS. Hence, to address this concern, we performed a sensitivity analysis by re-estimating the empirical models by incorporating more country-level control variables. In particular, we have additionally controlled for the gross domestic product (GDP) growth rate and the population growth rate in our empirical models.Footnote 1 Models [1], which explore the effect of culture score on SRS, and model [2], which delves into the moderating effect of SC on the culture and SRC nexus, are re-run after including GDP and population growth rates. The results are presented in Table 7 in Panel [1] for model [1] and Panel [2] for model [2]. The results indicate that the coefficient of the culture index score is positively associated with SRS. Likewise, the coefficient of the interaction between the sustainability committee and the cultural index score is positive. These results are qualitatively comparable to the findings presented in Tables 5 and 6. In terms of the additional control variables, the empirical findings reveal a positive significant effect of a country’s GDP growth rate on the reporting of sustainability practices. However, the population growth rate has an insignificant influence on sustainability reporting practices.

Table 7 Results after controlling for additional country-level variables.
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The distribution of the sample observations across countries, as shown in Table 1, reveals that the US has the highest frequency, accounting for 44.19% of the total sample. Canada follows, comprising 23.05% of the observations. Together, the US and Canada make up 67% of the sample. This uneven distribution raises the possibility that the findings may be disproportionately driven by the US and Canadian firms. To address this concern, we performed a sensitivity analysis by re-estimating the empirical models after excluding the US and Canada from the sample. As presented in Table 8, the regression outcomes excluding the US and Canada exhibit minimal deviations from the original findings reported in Tables 5 and 6. Particularly, the results indicate that the coefficient of the culture index score is significantly and positively associated with SRS. Likewise, the interaction coefficient between the sustainability committee and the cultural index score is positive. These results are similar to the main findings presented in Tables 5 and 6. However, the magnitude of the coefficients in Table 8 is lower than the coefficients presented in Tables 5 and 6. Besides, the investment opportunities (Invest Opp.) and firm leverage (Leverage) variables are not statistically significant at any significant level. Overall, the results are qualitatively comparable to the main findings, suggesting that they are not biased by the US and Canadian firms.

Table 8 Results after excluding the US and Canada.
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Conclusion

The academic literature reveals that the significance of a country’s cultural dimensions on corporate reporting is not inclusive, particularly regarding reporting sustainability practices. There is a space for more research to examine this nexus in environmentally sensitive industries. Therefore, this study focuses on the firms operating in the energy industries to explore the effect of a country’s cultural dimensions on reporting sustainability practices. Likewise, it investigates the role of the corporate sustainability committee on the intersection between a country’s cultural dimensions and sustainability reporting. The study uses a sample from the energy industries from 2010 to 2019. The sustainability reporting score is a firm’s Bloomberg ESG disclosure score that utilizes the following indicators: (i) environment disclosure level, (ii) social disclosure level, and (iii) corporate governance disclosure level. This study utilizes six cultural dimension scores: power distance, Individualism, Masculinity, uncertainty avoidance, long-term orientation, and Indulgence. The culture score in each country is the country’s score of its Power distance plus the score of Individualism plus 100 minus the score of masculinity plus the score of Uncertainty avoidance plus the score of Long-term orientation plus 100 minus the score of Indulgence. The sustainability committee is a dummy variable that equals one if the company has a committee for sustainability and Zero otherwise. The empirical findings are estimated using the LMM models. The findings suggest that reporting sustainability practices is a positive function of our country’s cultural dimensions. This reveals that a firm dissimilates higher levels of sustainability information when it operates in a country with a higher degree of power distance, a lower degree of Individualism, a higher degree of masculinity, a higher degree of uncertainty avoidance, a higher degree of long-term orientation, and lower degree of Indulgence and vice versa. Likewise, a sustainability committee moderates the relationship between a country’s culture and sustainability reporting.

The outcomes of the study provide significant implications for companies and policy-setters. First, the findings suggest that cultural values and norms prevalent in a country can shape how companies prioritize and communicate their sustainability practices. Thus, firms should be aware of these cultural nuances when shaping their sustainability reporting strategies. Second, firms should consider the role of a specialized sustainability committee, which can help companies navigate the complexities of cultural influences and enhance their reporting practices. Such committees may be crucial in aligning sustainability initiatives with cultural expectations and global reporting standards. Third, firms operating in international markets should be mindful of the challenges posed by differences in cultural dimensions. Balancing global reporting standards with local cultural expectations can be complex. Firms need to find ways to harmonize these differences to ensure their sustainability reporting is meaningful and well-received by diverse stakeholders. Finally, policymakers interested in promoting sustainability initiatives should consider the influence of cultural dimensions on reporting practices. Developing guidelines that accommodate cultural variations can lead to effective reporting and a better understanding of a company’s sustainability practices in various contexts.

Despite the contributions of this study in understanding the nexus between cultural dimensions and sustainability reporting, there is still room for more research in this field. Given the complexities involved in cultural influences on reporting practices, further investigations can delve deeper into new cultural dimensions, such as Religious culture, Confucian culture, Social trust, and Innovation culture, as explained by Mao et al. (2024).