Considering the dearth of research on the impact of sustainability reporting practices on financial stability in the context of transition economies, this study aims to explore sustainability reporting practices of top oil and gas companies in Russia and investigate the effects of sustainability performance indicators on financial stability in the context of a given emerging economy. The study is based on panel data analysis of sustainability performance indicators and financial data of forty-five largest oil and gas companies listed on the Russian Trading Stock Exchange over the period 2012-2016. Data on sustainability performance were collected through analyzing sustainability reports and annual reports, while financial data were obtained from audited financial statements downloaded from company websites. The empirical results indicate that companies improve their sustainability performance indicators in order to manage risk and improve their financial stability. The results also show that firm-specific characteristics, such as financial capacity, leverage, firm size, and firm age, are important underlying factors affecting the degree of financial distress and financial stability. The findings of the study provide managers and practitioners with useful aspects of sustainability performance indicators to improve financial stability and mitigate financial distress. Additionally, investors and practitioners should consider other underlying factors, including financial capacity, leverage, firm size, and firm age, that may influence financial stability. Finally, the findings are useful for policymakers and regulators in promoting Global Reporting Initiative guidelines which will ultimately lead to sustainable development and financial stability in the context of emerging markets.
Keywords: Emerging markets; Financial stability; Global reporting initiative; Russia; Sustainability reporting.