ABSTRACT This study examines the impact of firms' environmental innovation on Sustainable Development Goals (SDGs) reporting within the Gulf Cooperation Council (GCC) countries. Using data from 824 firms over the period 2016–2023, we analyse an unbalanced panel comprising 5739 firm‐year observations. Employing ordinary least squares and fixed effect models, we find that environmental innovation has a significant positive impact on the quantity, quality and scope of SDG reporting. This relationship remains robust across alternative proxies and endogeneity tests. The analysis further reveals that profitability and state ownership act as moderating factors, influencing the relationship between environmental innovation and SDG reporting. Our results remain consistent even after excluding financial firms as well as firms with missing data, confirming the robustness of the findings. We further show that the positive effect of environmental innovation on SDG disclosure is more pronounced in firms with high environmental, social and governance scores, providing support to the signalling and stakeholders theories. These findings underscore the importance of environmental innovation in enhancing SDG reporting practices in GCC countries. Policymakers may consider emphasizing environmental innovation to bolster SDG reporting in the region.
Hasan et al. (Fri,) studied this question.