Do Egyptian Listed Companies Support SDGs? Evidence From UNCTAD Guidance on Core Indicators Disclosures

This paper provides an exploratory analysis of the extent of Sustainable Development Goals disclosure (SDGD) by the top 30 Egyptian companies. We use the 33 core indicators of the United Nations Conference on Trade and Development (UNCTAD), which span economic, institutional, social, and environmental areas. Overall, the results suggest that SDGD in Egypt is still gaining traction, as indicated by a relatively low average disclosure score of only 25%, which translates to approximately eight indicators. We also document a variation in SDGD among the four areas, where disclosure addressing economic and institutional indicators is higher than that of social and environmental areas. This variation could be attributed to the differential regulatory and legal intensity. Disclosure is most noticeable for taxes, employment, women empowerment, financial transparency, corporate governance, and energy. We argue that Egypt has the legislative infrastructure and clear political will from the state to support sustainable development. However, there is a need for coordinated awareness efforts to establish a culture of sustainable development among various stakeholders, including businesses. Finally, there should be a stronger conviction regarding the importance of information sharing as well as comprehensive reporting standards and enhanced regulatory enforcement. To the best of our knowledge, this is the first paper to address the status of SDGD in Egypt. Accordingly, there is a need for future research that analyzes both the determinants of SDGD and its consequences.


INTRODUCTION
Development is sustainable only if it "meets the needs of the present without compromising the ability of future generations to meet their own needs" (UN Secretary-General & WCED, 1987, p. 14). This definition implies both a temporal balance between the present and the future, and a dimensional balance between the economic, social, and environmental aspects of such "needs". The United Nations (UN) has been a long-standing proponent of sustainable development, from the Millennium Development Goals (MDGs) set in 2000 to their successors, the Sustainable Development Goals (SDGs) of 2015 with the associated "2030 Agenda". Companies play an important role in attaining the SDGs, and this role is further amplified in emerging countries. This paper details an exploratory analysis of the extent of SDGs disclosure (SDGD) by Egyptian companies. We assume that such disclosure is a proxy for corporate commitment to these goals.
Several guiding frameworks, such as the UN Global Compact and The Global Reporting Initiative (GRI), have been developed to "operationalize" sustainable development within the context of a business enterprise. Companies are an integral component of any economy and are crucial partners in the quest to meet SDGs targets. However, the UN Conference on Trade and Development (UNCTAD, 2019) emphasizes the importance of reporting as a means available to various stakeholders to assess how companies economically, environmentally, and socially impact sustainable development. The GRI and UN Global Compact's 2017 report, "Business Reporting on the SDGs: An Analysis of the Goals and Targets", includes an opening note by Lise Kingo, CEO and Executive Director of the UN Global Compact, who states that: "The SDGs provide a unique opportunity to elevate communication on sustainability.

Governments have emphasized this agenda through SDG 12 -recognizing how important it is for companies to adopt sustainable practices and integrate this information into their reporting cycles. The expectations on companies are huge.
Companies that align reporting and communication with the SDGs will be speaking in the same language that increasingly is adopted by governments, foundations, NGOs and even investors" (p. 9) [Emphasis added].
Such a statement highlights that reporting corporate information related to sustainability is as important as the corporate commitment to sustainability.
To capture the extent to which Egyptian companies disclose activities pertaining to SDGs, we use the Guidance on Core Indicators (GCI) developed by UNCTAD 1 . While we assume that such disclosure is a proxy for corporate commitment to these goals, the absence of SDGD might also be indicative of merely ineffective evidence-based disclosure of such commitment. Academic literature focusing on SDGD is limited, as Calvin and Street (2020) note. Moreover, there is a dearth of research on developing countries in sustainability journals (Moses, Mohaimen, & Emmanuel, 2020). Accordingly, this study responds to the call for more research addressing developing countries and using quantitative analysis. This paper contributes to the limited yet growing literature on SDGD. Furthermore, while pursuing SDGs is essential for any country, the incremental positive impact of achieving SDGs targets is naturally greater for emerging economies as there is more room for improvement, making Egypt an interesting setting for this study. Finally, this study has important implications for policymakers in terms of enticing stronger corporate commitment to the SDGs as well as enforcing SDGD.
Since 2011, Egypt has been exposed to a series of profound political shocks, all of which have had significant economic and, in many cases, social implications. Political instability during the period between 2011 and 2013 took its toll on the Egyptian economy, resulting in inflation, capital flight, fall in foreign reserves, and unemployment. This was ultimately reflected in a reduction of both the wellbeing of people and the health of business enterprises. By 2014, a new regime was in place, which set the objective of building a stronger Egypt. Sustainable development is the logical approach to ensure that any corrective course of action does not merely address symptoms cosmetically but rather eradicates the root causes thereof.
Legislatively, the Egyptian constitution, which was redrafted in 2014, is compatible with the SDGs 2 . We present in Appendix the correspondence between the first five chapters of the constitution and each of the 17 SDGs. Naturally, the constitution of any country "sets the tone" for all stakeholders operating within that country's jurisdiction. This includes the government, civic society, businesses, and private citizens. In the case of Egypt, several articles of the constitution explicitly mention "sustainable development" or "sustainability"; Article 27, "Economic system", cites sustainable development as a means of achieving prosperity, while Article 41, "Housing", describes the state's commitment to a housing program that balances population growth, resources, and enhanced human capital within a sustainable development framework. The constitution also addresses the environmental dimension of sustainable development. Article 46, "Environment", clearly mentions the state's commitment to preserving the environment, avoiding causing environmental damage, and rationally using its resources as a means to attain sustainable development. In terms of food security, Article 79, "Food", sets a national goal for sustained food sovereignty.
In alignment with the 2014 constitution, and to devise actionable items towards sustainable development, in 2016 Egypt published the "Sustainable Development Strategy (SDS): Egypt Vision 2030", which sets clear targets and initiatives focusing on three dimensions: economic, social, and environmental 3 .
Our results suggest that the current sustainability-focused constitution coupled with the strong political will of the state has had some initial positive cascading effects on corporate Egypt; however, these effects should be further amplified. We find that companies' disclosure is more intensive for the economic and institutional aspects of sustainable development than for social and environmental ones. Furthermore, SDGD mainly tackles issues related to taxes, employment, women empowerment, financial transparency, corporate governance, and energy. The remainder of the paper is organized as follows. The second section presents the literature review. The third section presents the data and research methodology. The fourth section provides the results and discussion. Finally, the fifth section presents the conclusion.

LITERATURE REVIEW
Classical agency theory highlights the adverse consequences of separating ownership and control in business enterprises (Jensen & Meckling, 1976). Information asymmetry is inherent in any principalagent relationship; coupled with moral hazard, this means providers of capital (shareholders and creditors) might offer lower prices and higher interest rates to offset this increased risk. Disclosure is defined as "the communication of economic information, whether financial or non-financial, quantitative or otherwise concerning a company's financial position and performance" (Owusu-Ansah, 1998, p. 608). Thus, disclosure is considered a means of reducing principal-agent tensions by creating a fairer informational playing field. Furthermore, over time stakeholders have become more interested in other nonfinancial aspects of the companies, especially those related to firms' social and environmental responsibility. Accordingly, sustainability reporting aims not only to decrease the information asymmetry problem but also to increase companies' reputations among various stakeholders (Jizi, 2017). Prior studies document a positive association between disclosure of information related to socially responsible activities and market performance, and reveals that disclosure enhances relationships with stakeholders (Garcia-Sanchez, Cuadrado-Ballesteros, & Sepulveda, 2014). Environmental, social, and governance (ESG) information has also been found to enhance transparency and better enable stakeholders to evaluate the non-financial dimensions of firms' performance (Czerwińska & Kaźmierkiewicz, 2015).
Business entities play a crucial role in the attainment of SDGs according to the 2030 Agenda (Agarwal, Gneiting, & Mhlanga, 2017; Rosati & Faria, 2019a). Much research has studied SDGs in the context of enhancing corporate sustainability; for example, how SDGs help to enhance sustainability engagement and increase investment opportunities (Schönherr, Findler, & Martinuzzi, 2017;Schramade, 2017). The importance of SDGs and sustainability disclosure is reflected in a growing stream of academic research. The primary focus of this research is to identify the enabling and inhibiting factors of SDGs reporting. For instance, Rosati and Faria (2019b) identify the organizational characteristics that affect the likelihood of early adoption of SDGs reporting. They document a positive relation between company size, level of intangible assets, degree of commitment to sustainability frameworks and external assurance, the extent of female directorship, board of director youth, and the propensity for early adoption. Similarly, Rosati and Faria (2019a) attempt to identify country-level institutional factors that determine the addressing of SDGs in sustainability reports. Their results suggest that climate change vulnerability, national corporate social responsibility, company spending on tertiary education, indulgence and individualism, lower levels of market coordination, employment protection, power distance, and long-term orientation are conducive to SDGs reporting. Finally, Calvin and Street (2020) find that Dow 30 companies' disclosure of institutional and economic issues is more prevalent than that of environmental and social issues. Furthermore, they find that the level of GCI disclosure is higher for indicators that are related to the financial dimensions of ESG issues, which suggests that such reporting is driven by the fact that it is based on the information most interesting to shareholders.

DATA AND RESEARCH METHODOLOGY
To capture the extent of SDGD in corporate Egypt, the study sample comprises the top 30 actively traded companies in the Egyptian Exchange (EGX); that is, the EGX30 index companies 4 . As of 2017, the EGX30 companies were associated with 11 industries, as shown in Table 1. To operationalize the SDGD assessment, we used the GCI developed by UNCTAD. The GCI framework is based on 33 indicators that collectively measure the extent to which a reporting entity contributes towards the SDGs. These indicators focus on four major areas: economic (8 indicators), environmental (11 indicators), social (7 indicators), and institutional (7 indicators). Disclosure data for the EGX30 companies was manually collected from the 2017 annual reports, sustainability reports, and company websites. To ensure consistency and comparability among companies, we unified the search keywords for each SDG indicator disclosure. A company would be considered a "disclosing company" only if it provides an associated monetary value or a quantification to its disclosure of an SDG indicator. In that case, we assign a value of one to the company for that specific indicator. Otherwise, we assign a value of zero. In other words, any mere nonmonetized or nonquantifiable disclosure related to a SDG indicator is not considered an SDGD. All disclosure scores are expressed in percentages. Assuming that all companies make disclosures related to each one of the 33 area indicators, then the maximum possible accumulated points would be 990 (i.e., 33 area indicators multiplied by 30 companies), or 100%. The assessment of the extent and nature of SDGD is conducted at five levels: the SDG indicator, the GCI area, the company, the industry, and the overall EGX30 index.

The indicator disclosure score (IDS)
The IDS is calculated as the percentage of EGX30 companies' SDGDs related to the indicator i in area A as follows in equation (1).

The area disclosure score (ADS)
The ADS is an average score of the IDSs of all I indicators of area A (equation (2)).

The company disclosure score (CDS)
The CDS is the percentage of all the indicators disclosed by company j as follows in equation (3).

The sector disclosure score (SDS)
The SDS is the average CDS of all J companies belonging to sector S (equation (4)).
The EGX30 disclosure score (EGX30DS) EGX30DS is the average CDS of all 30 companies in the index as could be seen in equation (5)

EMPIRICAL RESULTS AND DISCUSSION
The above methodology and measures yielded the following results, which respond to the paper's main question well by providing a preliminary multilevel assessment of SDGD by Egyptian companies. Table 2 presents the number of companies reporting SDGD for each of the 33 indicators for the four areas.  The largest number of disclosing companies (26) was for "A.2.1. Taxes and other payments to the Government", which is consistent with the regulatory nature of taxes and tax reporting. Four indicators had no disclosing companies, namely "B.1.3. Water stress", "B.3.2. Greenhouse gas emissions (scope 2)", "B.4.1. Ozone-depleting substances and chemicals", and "C.3.2. Frequency/ incident rates of occupational injuries". This preliminary observation suggests that EGX30 companies SDGD pertaining to environmental issues is generally weak. Table 3 presents the aggregate ADSs and the highest IDSs in each area. Within the social area, the two highest indicators were "C.2.3. Employee wages and benefits as a proportion of revenue, with a breakdown by employment type and gender" (57%) and "C.1.1. Proportion of women in managerial positions" (37%). The focus of top Egyptian companies on the pressing issues of employment, gender equality, and women empowerment is aligned with steady governmental, legislative, and societal strides in these areas. The state's efforts to highlight and address challenges facing women are very visible. The year 2017, for instance, was declared the "Year of the Egyptian Women". Such a stance is reflected in serious initiatives for women's representation in different arenas, including political parties, civil society organizations, and legislative, executive, and judiciary branches of government. This interest in women empowerment was further cascaded to the governance of publically listed companies, as discussed below.
The highest scoring indicators within the institutional area were "D.1.1. Number of board meetings and attendance rate" (43%), "D.1.2. Number and percentage of female board members" (37%), and "D.1.5. Compensation: total compensation per board member (both executive and non-executive directors)" (37%). We argue that these scores are a function of promoting best corporate governance practices and stricter listing rules pertaining to board structures intended to enhance corporate oversight and transparency (Shehata, 2015). In terms of disclosing the gender diversity of boards, this is a response to the ongoing call for better representation of women on boards over the recent years. It is worth mentioning that in 2019, the Financial Regulatory Authority of Egypt issued regulatory decisions that mandated listed companies and companies operating in the field of non-banking financial activities to have at least one female director on their boards. Thus, the EGX30 companies' relatively extensive disclosure of gender-related indicators reflects the increasing focus on gender equality and women empowerment in corporate Egypt. This is also consistent with prior studies documenting favorable effects of the board of directors' gender diversity on various aspects of firm performance, such as more effective oversight (Larcker & Tayan, 2016) and higher earnings quality (Srinidhi, Gul, & Tsui, 2011).
Finally, in terms of the environment, the analysis suggests that indicators pertaining to energy and water are a focus of the companies' SDGD. These indicators are "B.5.1. Renewable energy" (20%), "B.5.2. Energy efficiency" (20%), "B.1.2. Water use efficiency" (13%), and "B.3.1. Greenhouse gas emissions (scope 1)" (13%). Corporate interest in energy is trigged by cost efficiencies and recent tax and customs incentives associated with renewable energy in Egypt. Although having a low disclosure score, water use efficiency disclosure is expected to rise. This is because Egypt faces increasing challenges with its freshwater supply, especially from the river Nile, which is estimated to constitute around 97% of the country's renewable water resources. In terms of climate, although disclosure on greenhouse gas emissions is among the highestscoring indicators in this area, in comparison to indicators of other areas it seems that it is not a primary issue addressed through corporate reporting.

Area-level disclosure
The order of areas based on scores was as follows: the economic area (49%), the institutional area (25%), the social area (20%), and finally, the environmental area (9%). This order is consistent with the relative regulatory and enforcement intensity associated with each area. The top two areas are heavily governed by listing requirements, financial supervisory rules, accounting standards, and corporate governance best practices. This is consistent with Calvin and Street (2020), who find that the economic and institutional areas also exhibit the highest level of disclosure by Dow 30 companies and that this is driven by the need to meet the US Generally Accepted Accounting Principles and Securities and Exchange Commission regulatory requirements. The social area came third and was mainly driven by disclosure showcasing gender equality and women empowerment. The focus on employee wages and benefits also aligns with the improved social protection ecosystem introduced by the Egyptian government in 2015 5 . The environmental area scored the least, suggesting that more environmental awareness and/or better environment-related disclosure is needed.

Sector-level disclosure
At the sector level, the top three sectors with the highest SDSs were banking (58%), food and beverage (48%), and oil and gas (36%). A contributing factor to the higher disclosure score in the banking sector could be its inherently greater regulatory nature.

EGX30-level disclosure
The overall average disclosure score of EGX30 index companies is 25%, or around only 8 out of 33 SDGs indicators. This is rather a low level of disclosure, which necessitates more collective and focused efforts by all parties concerned with sustainable development, in addition to better-associated disclosure practices. 5 In 2015, the "Takaful and Karama"which translates to English as "Solidarity and Dignity"are conditional and unconditional cash transfer social safety programs launched with a US$400 million support fund from the World Bank. The program is managed by the Egyptian Ministry of Social Solidarity and has covered approximately 10% of Egypt's population. 6 The Principles for Responsible Investments (PRI) are UN-supported principles launched in 2016 focusing on "incorporating environmental, social and governance (ESG) factors in investment practices" https://www.unpri.org/pri/aboutthe-pri 7 "United Nations Environment Programme Finance Initiative (UNEP FI) is a partnership between UNEP and the global financial sector to mobilize private sector finance for sustainable development. UNEP FI works with more than 300 membersbanks, insurers, and investorsand over 100 supporting institutionsto help create a financial sector that serves people and planet while delivering positive impacts. We aim to inspire, inform and enable financial institutions to improve people's quality of life without compromising that of future generations. By leveraging the UN's role, UNEP FI accelerates sustainable finance" https://www.unepfi.org/about/

CONCLUSION
This exploratory study attempts to shed light on the level of business commitment to sustainable development and the extent of the disclosure of corporate activities related to the UN SDGs. The study uses a sample of the 30 largest and most actively traded companies in Egypt constituting the EGX30 stock market index as of 2017. We developed five measures based on the GCI of the UNCTAD. These measures capture SDGD at the indicator, SDG area, company, sector, and index levels. Overall, results suggest that deliberate corporate commitment to sustainable developmentor at least the clear and systematic disclosure of such commitment -is in its early stages. However, corporate disclosure addressing SDGs associated with the economic and institutional areas are more pronounced than those of the social and environmental areas. This is primarily due to the stronger regulatory and legal stipulations that apply to the former two areas.
Furthermore, there are variations among indicator-related disclosure across the different areas. In general, corporate disclosure seems to be relatively more focused on issues that are considered of higher priority and more visible on the developmental agenda of Egypt. These issues include taxes, employment, women empowerment, financial transparency, corporate governance, and energy. The results also indicate that further coordinated effort by the government and civic society is needed to increase awareness of the SDGs and instill a culture of sustainable development among various stakeholders while highlighting the importance of sharing information through disclosure. This should be coupled with more comprehensive reporting standards and enhanced regulatory enforcement.
Finally, as with any other study, this paper has its limitations. Since it only provides insights concerning the extent to which the top 30 Egyptian companies disclose SGD-related information, caution should be exercised when generalizing inferences to other companies. However, this paper could be considered a starting point for other extended research using multivariate analysis to ascertain both the determinants of SDGD and the market consequences of such disclosure in a country such as Egypt that has been undergoing political, economic, and social transformation. Determinants of SDGD that could be examined in future research include firm characteristics, board characteristics, and ownership characteristics. Moreover, another potential stream of research could focus on the consequences of SDGD in terms of stock price reaction.