Non-financial determinants influencing Sustainable Development Goals disclosure in traditional banking institutions in Latin America Open Access

The 17 Sustainable Development Goals (SDGs) and their 169 targets were established by an initiative of the United Nations (UN) channeled through the United Nations Development Programme (UNDP) as part of the 2030 Agenda, spanning a period of 15 years and involving participation from 193 countries worldwide (Orzes et al., 2018; Queralt et al., 2017; Wang and Butkouskaya, 2023). The introduction of the 2030 Agenda in September 2015 underlined the critical need for the global population to access a broader range of financial services. This access is essential for directly influencing the achievement of at least 7 Sustainable Development Goals (SDGs), including SDG 1 “No Poverty”, “SDG 2” “Zero Hunger,” SDG 3 “Good Health and Wellbeing,” SDG 5 “Gender Equality,” SDG 8 “Decent Work and Economic Growth,” SDG 9 “Industry, Innovation and Infrastructure,” and SDG 10 “Reduced Inequalities” (Deloitte, 2021; UNSGSA, 2023).

The integration of SDG priorities into business models, strategies, and daily operations, along with communicating progress in these areas, has emerged as a crucial factor for companies aiming to maintain legitimacy and meet stakeholder expectations (Heras-Saizarbitoria et al., 2022; Dalwai et al., 2023). One of the challenges ahead for academics in the field is realizing the dynamics behind the incorporation of SDGs in non-financial reporting released by financial organizations. The selection of SDGs to prioritize may be influenced by various factors, including country of origin, economic sector, operational activities, business model, corporate culture, regulatory framework, and stakeholder interests, among other causes (van Zanten and van Tulder, 2018). As noted by KPMG (2018), following the implementation of the SDGs and the corresponding alignment in sustainability practices, there has been a consistent year-over-year increase in the significance of corporate non-financial information reports. Alignment with the SDGs calls on businesses to address economic, social, and environmental challenges in their operations while identifying other related issues (Taglialatela et al., 2023).

Several recent studies worldwide (Belasri et al., 2020; Ngong et al., 2024; Nguyen, 2022; Siueia et al., 2019) and in Latin America (Acevedo Tellez and Piñeros, 2019; Kowszyk et al., 2019; Ovelar-Fernandez, 2019) have examined sustainability disclosure in traditional financial entities. Findings indicate that since the subprime crisis, these companies have actively sought to increase the visibility of their sustainability actions to legitimize their position with stakeholders. The existing studies analyzing the determinants of corporate SDG disclosure tend to be restricted to analyses centered on a single year of disclosure (Rosati and Faria, 2019) or firms from a single country (Gunawan et al., 2022; Pastor et al., 2019). Few studies have explored the evolution of SDG disclosure across multiple countries over an extended period. While a considerable body of research has investigated the influence of non-financial and sustainability-related factors on enterprise value, firm financial performance, and corporate reputation in emerging economies (Arianpoor et al., 2023; Vitale et al., 2022; Zimon et al., 2022), this paper takes a different approach by not focusing on these particular dependent variables. Within supply chain contexts, Bagherpasandi et al. (2024) offer valuable insights into how organizational, institutional, and policy-level factors collectively enhance sustainability performance and sustainable supply chain management. Dalwai and Salehi (2021) underscore the significant role of business strategy and intellectual capital in shaping firm performance and mitigating bankruptcy risk within Oman’s non-financial sector. Furthermore, it is noted that empirical studies in this field often overlook financial firms due to their unique characteristics and peculiarities in the disclosure of both financial and non-financial information, despite the role of such organizations in promoting the sustainability of other entities and enhancing financial inclusion within society (Issahaku et al., 2023; Pagani et al., 2020; Pizzi et al., 2020). Their investment and lending policies clearly show the use of environmental, social, and governance standards.

Therefore, significant research gap persists regarding the influence of non-financial drivers on SDG disclosure within Latin American banking institutions, particularly when considering multi-year and multi-country analyses. This study aims to address this gap by analyzing how board characteristics (e.g. size and independence), gender diversity in the workforce, the adoption of integrated reporting frameworks, and the implementation of external assurance practices affect the extent of SDG disclosure. Employing rigorous econometric analysis on a cross-country panel dataset, this study provides novel empirical evidence on the determinants of sustainability disclosure in the banking sector, a crucial industry for the achievement of the 2030 Agenda. Consequently, the purpose of this paper is to examine the non-financial determinants in the sustainability reporting of Latin American banks, particularly concerning the SDGs.

The remainder of the article is organized as follows: Section 2 outlines the study’s theoretical approach, encompassing the literature review, theoretical framework, and the rationale behind the hypotheses. Section 3 describes the methodological approach, including the research design and the tools employed for data collection and analysis. Section 4 presents the empirical results. Section 5 discusses the main findings. Finally, Section 6 provides the conclusions, acknowledges the study’s limitations, and offers recommendations for further research.

A number of studies conducted globally concentrate on voluntary disclosure of sustainability information and investigate the role of private-sector financial institutions in facilitating the achievement of sustainable goals (Avrampou et al., 2019; Cosma et al., 2020; Elder and Olsen, 2019; Grajales and Albanés Uribe, 2024; Raffaelli et al., 2025). Examining the determinants of sustainability disclosure, Salehi and Arianpoor (2021), as well as Arianpoor and Salehi (2021), offer valuable insights into the financial and non-financial drivers of business sustainability performance. Based on a comprehensive set of 114 and 125 validated indicators, respectively, from Iranian listed firms, their studies reveal a bidirectional relationship between financial and non-financial dimensions of sustainability. These findings suggest that sustainability performance cannot be fully understood without considering how operational, research-based, and financial capabilities interact with broader social and environmental commitments. In line with this comprehensive framework, Maeenuddin et al. (2024) constructed a Financial Sustainability Index to evaluate the financial viability of microfinance institutions (MFIs) in Pakistan, identifying loan size, the proportion of female borrowers, liquidity, and leverage as key determinants of financial sustainability. While the scope of the study is confined to MFIs, the findings further emphasize the pivotal role of financial self-sufficiency and internal financial dynamics in advancing long-term sustainability objectives, including those aligned with the SDGs. Rosati and Faria (2019) identified that SDG reporting for the 2016 timeframe is positively related to company size and some corporate governance indicators among a sample of 408 companies examined. Their evidence supports the link between sustainability reporting and legitimacy and stakeholder theories, highlighting that businesses oriented towards proactive adoption of SDG reporting tend to be more responsive to stakeholder pressures. As previously stated, this study draws on legitimacy and stakeholder theories to analyze the specific variables affecting SDG disclosure by Latin American financial institutions. Legitimacy theory holds that firms enter into a social contract wherein they commit to undertake specific socially desirable and environmentally beneficial actions in return for societal acceptance of their objectives and other rewards that ensure their survival (Vourvachis et al., 2016). Corporations generate annual sustainability reports to legitimize their actions before society and enhance their recognition and public image (Deegan, 2002; Dowling and Pfeffer, 1975; Lindblom, 1993; Michelon et al., 2019; O’Dwyer et al., 2011). Stakeholder theory explains how firms respond to stakeholder demands to gain a competitive advantage and ensure their long-term survival within society and among the individuals who influence and are influenced by their operations (Freeman, 1984; Freeman et al., 2020; Khomsiyah et al., 2024; Mahajan et al., 2023; Mitchell et al., 1997). Non-financial interest groups—stakeholders—exert pressure on firms to disclose SDGs, prompting them to actively participate in attaining these goals. Insufficient multi-stakeholder engagement and involvement will hinder the transparent implementation of the SDGs and their alignment with society’s underlying values. García-Sánchez et al. (2022) have also emphasized the multidimensional nature of SDG disclosure drivers. Based on a comprehensive Tobit regression model, they examined the integration of the SDG into non-financial information systems using a large international sample of 1,535 companies from 2015 to 2017. Their findings reveal that institutional pressures at the country level, firm size, financial market incentives, and governance-related factors exert the most substantial influence on SDG reporting. Additionally, in contexts lacking strong external and institutional pressures, the sustainability-related training of the CEO becomes the main explanatory factor.

In the Latin American context, Pineda-Escobar (2019) identified that some entities in Colombia are willing to incorporate the SDGs into their sustainability reports, while private-sector firms tend to adhere only to specific SDGs pertinent to their operations. Montoya (2018) examines the methods by which specific companies listed in Argentina report their contributions to the SDGs in their Corporate Reports. Camarán et al. (2019) conducted a case study on a Venezuelan industrial services company to investigate the corporate social responsibility initiatives undertaken in relation to SDG disclosures, complemented with in-depth interviews with the company’s president and management. Gambetta et al. (2019) assess the commitment of listed firms to the SDGs in several Latin American nations through an analysis of their sustainability reports, using a final sample of 803 non-financial listed companies from 2017. However, none of these studies addresses the determinants of SDG disclosure.

The determinants of sustainability disclosure by private entities are examined, including the composition, size, and independence of the board of directors, as well as the existence of a sustainability committee. In addition, publication of non-financial information under the integrated reporting format (IIRC) and the auditing of non-financial reports are discussed below, drawing on recent systematic reviews that highlight board governance, assurance mechanisms, and reporting frameworks as critical enablers of sustainability disclosure (Acheampong et al., 2025). These findings reinforce the importance of examining such variables in the context of SDG reporting:

The size of an organization’s board of directors refers to the total number of board members. Larger boards are often thought to possess a broader spectrum of experience, financial knowledge, expertise, and problem-solving abilities, enhancing the organization’s reputation and image. Such boards typically exhibit increased diversity, allowing for a more equitable representation of varied interests. Furthermore, larger boards are more likely to include members with environmental expertise, which is crucial for the effectiveness of sustainability committees and for steering board decisions toward environmentally responsible options.

Despite the substantial body of literature on the role of board size in sustainability, evidence linking board size to the SDGs remains scarce, and no unambiguous statistically significant results have been obtained (Pizzi et al., 2020; Zampone et al., 2024). Masud et al. (2018) found a positive correlation between board size and sustainability reporting by examining a sample of 88 companies from three South Asian countries. Conversely, a recent paper by Githaiga and Kosgei (2023) investigated the relationship between specific board characteristics and sustainability reporting using a sample of 79 listed companies drawn from East African stock exchanges over the period 2011–2020, revealing that the size of a company’s board has a major negative impact on sustainability reporting. Therefore, despite this latter empirical finding, the first hypothesis posits that board size is a positive determinant of SDG compliance:

Independent board directors contribute to a company’s legitimacy and enhance its public image (Silva, 2021). Independent directors often hold prestigious positions in non-governmental organizations (NGOs) or academic institutions. Consequently, in fulfilling their responsibilities, they prioritize the reputational implications of their actions, which in turn influence sustainability performance (Martínez-Ferrero and García-Meca, 2020). As the literature shows, a higher proportion of independent directors improves the transparency of a company’s disclosures and the quality of its non-financial reporting (Pizzi et al., 2020). Independent directors formulate proposals incorporating external perspectives that internal directors may overlook, underscoring the reputational benefits of engaging in global initiatives, including support for the SDGs.

Martínez-Ferrero and García-Meca (2020) conducted an empirical analysis of 365 European companies to determine the impact of CEO independence on SDG-related disclosure in sustainability reporting, suggesting that a more independent board has a favorable impact on a company’s contribution to the 2030 Agenda. Positive results were also found by Pizzi et al. (2020), implying that independent directors improve SDG reporting scores. In contrast, Sekarlangit and Wardhani (2021) identified a statistically insignificant relationship. Based on this evidence, the following hypothesis is proposed:

Recognizing the distinct behaviors exhibited by women and men from traditional, cultural, and social perspectives, gender diversity emerges as a crucial attribute of contemporary organizations. In this regard, the United Nations' 2030 Agenda addresses issues like equal opportunities and gender diversity, which are hindered by labor barriers and affect non-financial reporting practices. As Mazumder (2024) observes, optimal gender balance is frequently associated with enhanced sustainability practices.

Empirical research data gathered in this field helps support this overall perspective. Sannino et al. (2020) tested the hypothesis that masculinity is negatively related to GRI commitment levels. Based on the assumption that levels of corporate disclosure are positively related to social orientation, they expected to find that masculinity is negatively associated with GRI commitment levels, which was indeed the outcome observed in their sample of banks from OECD countries. Using a sample of 81 European companies, Nerantzidis et al. (2022) suggest that gender diversity has a beneficial impact on corporate social performance. In the same vein, Nadeem et al. (2017) investigated whether gender diversity influences sustainability disclosures of Australian companies and found positive results. Given the above explanation, the following hypothesis is proposed:

Sustainability activities and their associated information disclosure represent a complex and overwhelming undertaking, presenting challenges for board members beyond the supervision of standard financial reporting (Helfaya and Whittington, 2019). Entities are increasingly recognizing the necessity of establishing an independent sustainability committee within their management structures.

The presence of a sustainability committee influences the quality of non-financial information disclosed (Helfaya and Whittington, 2019). Various empirical studies (Bose et al., 2024; Subramaniam et al., 2023) indicate that SDG adoption is most likely dependent on the existence of a subcommittee responsible for sustainability issues, contending that the presence of a sustainability committee on the board of directors would indicate the company’s definitive orientation and commitment to sustainability, as well as the implementation of the SDG agenda. This study forecasts that, by leveraging the expertise of its members, the sustainability committee will lead to tangible changes and improvements in the company’s implementation, disclosure, and oversight of the SDGs. Pizzi et al. (2020) investigated the variable presence of sustainability committees in the Italian context, yet their findings did not yield a significant relationship. In contrast, Subramaniam et al. (2023) provide evidence of a direct relationship between the existence of a sustainability committee and SDG disclosure in the Australian context. Therefore, the present study proposes that the existence of a sustainability committee influences corporate SDG disclosure.

Guidelines and frameworks that promote the incorporation of the SDGs in corporate reporting include the Global Reporting Initiative (GRI), the International Integrated Reporting Council (IIRC), and the Global Compact (GC).

Izzo et al. (2020) demonstrated that non-financial reports are preferred over sustainability reports by empirically establishing a positive relationship between the issuance of integrated reports (IR) and SDG disclosures (Izzo et al., 2020). This outcome aligns with the findings of Rosati and Faria (2019), which identify adherence to a framework as a differentiating factor in terms of SDG information reporting. Integrated reporting enables companies to combine business sustainability with integrated financial information to demonstrate how to create value over time, thereby fostering better decision-making (Hamad et al., 2023), which facilitates embedding the SDGs into corporate thinking and reporting (Izzo et al., 2020). The findings from van der Waal and Thijssens (2020) indicate that participation in reporting initiatives like those of the IIRC increases the likelihood of disclosing SDGs among Forbes Global 2000 firms, which leads to the following hypothesis:

Not only have professional organizations and assurance providers—such as the Big Four audit firms (EY, Deloitte, PwC, and KPMG)—advocated for more reliable corporate disclosures but are also actively engaged in including the SDGs into business strategy. Firms that invest in voluntary assurance of their sustainability reporting are more likely to monitor management’s behavior and demonstrate a stronger dedication to reaching sustainability goals (Al-Shaer and Zaman, 2019).

Studies reveal that investors show a favorable perception of a company’s sustainability performance when sustainability reporting is assured (Zampone and Guidi, 2024). When accompanied by a verification report, sustainability information receives a higher weighting, positively affecting investors’ evaluations (Reimsbach et al., 2018). The expected outcome of an organization’s approach to SDG reporting is confirmed by the observed positive association between early adoption of SDGs in sustainability reporting and the presence of an external sustainability audit statement (Rosati and Faria, 2019). Similarly, a positive relationship is anticipated between the content and quality of SDG disclosures and the existence of an external sustainability reporting assurance conducted by accounting firms or sustainability service providers. Many large corporations rely on the services of Big Four assurance firms to obtain external validation, thereby legitimizing and evidencing their genuine commitment to sustainability reporting (Schaltegger and Wagner, 2011). Based on the preceding discussion, the following and final hypothesis is proposed:

This study followed a quantitative methodology characterized by an explanatory and longitudinal design. It examines the non-financial factors influencing SDG compliance among traditional financial entities that are listed on the national stock exchanges of the six Latin American nations with the highest nominal GDP in USD (World Bank, 2022). These countries include the four members of the Pacific Alliance (Chile, Colombia, Mexico, and Peru), as well as two major players in the South American market: Brazil, the only Latin American member of the BRICS (emerging economies with the greatest development potential) and Argentina, notable for its representativeness in South America and its membership in the Group of Twenty (G-20), the world’s foremost political and economic deliberation forum.

The sampling process involved selecting the four listed traditional financial institutions with the highest market capitalization from each country, resulting in a total of 24 observations per year during the period 2017–2023. This timeframe was deemed suitable as 2017 marks the year when the sampled companies started reporting on SDGs following the entry into force of the 2030 Agenda, while 2023 provides the most current data, thereby maximizing the number of observations to 168 firm-year observations. Once the entities had been identified, their corporate reports were scrutinized to gather data regarding the attainment or non-attainment of specific SDGs, support for financial inclusion, and influencing factors—all of which are critical for assessing the hypothesis. Data were extracted through content analysis aimed at coding both qualitative and quantitative information.

SDGSUM, an index measuring the level of SDG disclosure, serves as the study’s dependent variable. An unweighted approach has been employed for its calculation (Khan et al., 2021), treating each element of the SDGs in the index as equally significant. This index comprises the number of prioritized SDGs, with its value representing the total number of SDGs disclosed by the company in each report submitted. This value can range from 0 (indicating no SDGs are disclosed) to 17 (indicating all SDGs are disclosed) for each company/year (Zampone et al., 2024). A higher index score reflects a greater level of SDG disclosure.

The independent research variables of the study are specified as follows:

• Board size (SIZEBD): quantified by the total number of directors on the board.

• Board member independence (INDBD): the percentage of independent directors who do not hold any stake in the firm’s capital relative to the total number of board members.

• Employee gender diversity (WEMPL) is represented as the proportion of female employees relative to the total employee count.

• The presence of an internal sustainability committee (SC): a dichotomous variable assigned a value of 1 if there is an SC, and 0 otherwise.

• Compliance with the integrated reporting format (IIRC): a dichotomous variable assigned a value of 1 if the company adheres to the framework established by the International Integrated Reporting Council (IIRC), and 0 otherwise.

• Report auditing by Big Four (ASSURB4): a binary variable assigned a value of 1 if the reports were audited by any of the Big Four firms, and 0 otherwise.

Control variables were introduced to the model to reduce the omitted variable bias. The impact of these variables on sustainability disclosures has been tested in recent research (Bose et al., 2024; Morales-Casetti et al., 2024). In this connection, our study differentiates two aspects: the year of the report (REPORTY), providing a cross-sectional view of the progression of non-financial reporting from 2017 to 2023; and the country-level SDG index (SDGINDEX), an assessment of each country’s overall performance across the seventeen SDGs at specific measurement times, derived annually from the SDG Index and Dashboards (Sachs et al., 2021).

A statistical analysis was conducted on the non-financial and sustainability factors of traditional banks, examining their contribution to the achievement of the SDGs through the application of multiple linear regression.

The following model was used to test hypotheses H1-H6.

where subindex i denotes the individual company and t represents the time period.

The descriptive statistics for the dependent variables and variables of interest are presented in Table 1. The independent variable SIZEBD exhibited a mean of 11.256 (SD of 3.603), with a minimum of 5 and a maximum of 22 managers. This indicates that the average number of board members in the sample companies is 11, of whom approximately 5 are independent (INDBD), as shown by a mean of 0.452, with a minimum of 10% and a maximum of 81%. Women represent an average of around 52% of the workforce across all observations, with a minimum of 38% and a maximum of 71%, which reflects adherence to gender equity and diversity policies within the Latin American banking work environment.

Regarding the SC variable, a mean of 0.381 reveals that fewer than 40% of the firms studied included sustainability committees in their reports. Approximately 58% of the reports were prepared in accordance with the International Integrated Reporting Council (IIRC) guidelines, while 74% of them received assurance of non-financial information from one of the major auditing firms (Big Four).

Regarding the control variables, the mean of REPORTY is 2020, derived from 24 observations per year, spanning from the earliest period of 2017 to the most recent period in 2023. The SDGINDEX variable presents a mean value of 72.325 with SD = 3.111, reflecting values close to the index across the countries in the region over the past seven periods, ranging from 67.611 to 78.258.

Prior to the regression analysis, a correlation test was run to rule out the possibility of multicollinearity among the observed variables. Table 2 presents the Pearson correlations for the disclosure index, independent variables, and control variables, with none exceeding 0.005, thus implying no multicollinearity in the correlations among the independent variables, as no bivariate correlation exceeds the value of 0.8 (Gujarati and Porter, 2009).

With a mean variance inflation factor (VIF) for the variables reported at 1.340, with a minimum of 1.080 and a maximum of 1.770 (Table 3), the multicollinearity test is strengthened. Hence, it is unlikely that the current study will experience multicollinearity issues, as only VIF values above 10 typically suggest potential multicollinearity (Gujarati and Porter, 2009).

The remaining validity tests of the model are displayed in Table 5, including normality, heteroscedasticity, and functional form specification error. As can be observed, the error is normally distributed; error variance is constantly distributed, indicating the model’s homoscedasticity; and it has an appropriate functional form, thus satisfying the assumptions of the multiple linear regression model.

The regression analysis illustrated in Table 4 suggests a statistically significant model, as evidenced by a 95% confidence interval resulting from F (8, 159) = 12.222, with satisfactory goodness of fit containing an R-squared value of 0.381 and an adjusted R-squared value of 0.350. Therefore, the model accounts for between 38 and 35% of the variability in the dependent variable, respectively. Furthermore, the inclusion of the 6 explanatory variables contributed significant statistical value to the model (see Table 5).

Upon further examination of Table 4 and the multiple linear regression model in order to test the established hypotheses, it is noted that

H1 suggests a positive relationship between a company’s board size and its SDG disclosure. The results indicate that the explanatory variable is significant with a p < 0.05 (0.022), yet it exhibits a negative coefficient of −0.180. This implies that the relationship observed in the present model is contrary to the anticipated outcome, as adding one person to the board correlates with a decrease of 0.018 points in the probability of disclosing information about the SDGs.

H2 posits a positive relationship between a company’s board member independence and its SDG disclosure. As this explanatory variable consists of percentage values, the $β2$ value should be divided by one hundred to obtain accurate interpretations of the coefficient. Hence, an increase of 1 in the percentage of board member independence raises the likelihood of disclosing a greater number of SDGs by 0.05 points. The significance of the explanatory variable was confirmed with a p < 0.01 (0.003), validating the proposed hypothesis of a direct relationship between the variables.

H3 states that a greater proportion of women in the company’s workforce has a positive influence on the level of SDG disclosure. As in the previous case, given that this variable of interest consists of percentage values, the $β3$ value must be divided by one for accurate interpretations of the coefficient. Consequently, an increase of 1 in the percentage of female employees results in a decrease of 0.11 points in the likelihood of disclosing additional SDGs. This finding contradicts the initial hypothesis and reveals statistical significance at p < 0.05 (0.023).

H4 suggests that the presence of a sustainability committee on a company’s board has a positive impact on the level of SDG disclosure. Nevertheless, the findings show that the explanatory variable is not significant, with a p > 0.05 (0.757), indicating no association.

H5 poses that the type of reporting prepared under the IIRC guidelines has a positive influence on the level of SDG disclosure. The findings demonstrate that the independent variable is significant, with a p < 0.01 (0.000) and a positive coefficient of 3.128, signifying a direct relationship in the model, consistent with the initial expectations. Reporting under the IIRC guidelines results in a 3.128 increase in the number of SDGs disclosed.

The final hypothesis, H6 formulates a positive association between company engagement in sustainable information assurance provided by the Big Four and the likelihood of SDG disclosures. The model shows that when the reporting of non-financial information is assured by one of the Big Four, the number of SDGs disclosed rises by 3.422 points. The explanatory variable is significant with p < 0.01 (0.000), thus validating the hypothesis with a positive and significant association.

Both control variables (REPORTY, SDGINDEX) display statistically significant links with SDG disclosure. Specifically, REPORTY exhibits a positive relationship (⁠$β7$ = 0.331, p < 0.05), while SDGINDEX reveals an inverse association (⁠$β8$ = −0.397, p < 0.01). The reasonably significant positive relationship between the dependent variable and the year of the report is attributed to advancements in the preparation of non-financial reports over time (2017–2023). Conversely, the country-level SDG Index (SDGINDEX) reveals a significant inverse relationship with the indicators established for each financial entity.

The robustness of the findings was further examined through additional analyses utilizing robust regression and M-estimators: ordinary least squares with heteroskedasticity-robust standard errors (Model 1) and robust regression employing M-estimators based on Huber weighting (Model 2). These techniques aim to address potential issues arising from heteroskedasticity and outliers, enhancing the reliability of the coefficient estimates.

In Table 6, the results of Model 1 reveal that board independence (INDBD), the use of the IIRC framework (IIRC), and prior external assurance (ASSURB4) are positively and significantly associated with SDG disclosure (p < 0.01), while board size (SIZEBD) and the proportion of women employees (WEMPL) have a negative and statistically significant relationship with SDG disclosure (p < 0.05). In the control variables, Report year (REPORTY) is positively associated with the dependent variable and significant at the 5% level. Additionally, the country-level SDG index (SDGINDEX) shows a consistent and statistically significant negative effect on disclosure (p < 0.01). Sustainability committee (SC) remains statistically insignificant.

Model 2, estimated through robust regression, yields highly consistent results, reaffirming the statistical significance and direction of the key relationships. While the magnitude of the coefficients varies slightly, the pattern and implications of the findings remain unchanged. These results indicate that the conclusions are not sensitive to outliers or violations of homoscedasticity assumptions.

This study’s findings shed light on the non-financial determinants of SDG disclosure among Latin American banks. The positive association between board independence and SDG disclosure lends support to the stakeholder theory, which holds that increased diversity and autonomy among decision-makers can foster accountability and transparency. This finding aligns with earlier studies (Martínez-Ferrero and García-Meca, 2020) suggesting that organizations should rethink their board composition to enhance sustainability and their rapport with stakeholders.

The audit of reports by reputable firms such as the Big Four and the adoption of the International Integrated Reporting Council (IIRC) guidelines are acknowledged as crucial factors that promote transparency in SDG disclosure. The audit by the Big Four not only adds a level of trust and credibility to reporting, but also encourages the adoption of rigorous disclosure practices that conform to international standards (Reimsbach et al., 2018; Rosati and Faria, 2019). The value of this external endorsement cannot be overstated, as stakeholders demand reliable and verified information on institutions' commitment to the SDGs. Furthermore, the application of IIRC standards is linked to the incorporation of sustainability into business strategy, which drives greater SDG disclosure and communication (Hamad et al., 2023; Izzo et al., 2020). Adopting these criteria not only enhances the quality of reported information but also enables businesses to showcase their contribution to global goals, strengthening their legitimacy and market position. This underscores the significance of quality standards in non-financial reporting, which not only benefits organizations but also their stakeholders, who demand trust and credibility in reporting.

The findings on board size and the proportion of female employees illustrate the intricacy of these relationships. Contrary to expectations, a larger board size is negatively associated with SDG disclosure, implying potential communication issues or inadequate decision-making among larger boards. This finding, similar to that of Githaiga and Kosgei (2023), implies that a smaller board may exhibit greater agility and focus on sustainability matters. The variable of the proportion of female employees also exhibited an inverse and significant association with SDG disclosure, contradicting the notion that increased female participation in the workforce would encourage a stronger commitment to sustainability. This finding indicates that, despite attempts to promote gender equality, institutions may not be fully capitalizing on diversity within their frameworks for sustainability practices. It is worth noting that, although the mean of the values obtained shows an average of 52.7% of female employees in Latin American banks, suggesting gender equity, this does not necessarily translate into SDG disclosure.

Lastly, control factors, including the reporting year and country-specific SDG index, offer further context for analysis. The upward trend in disclosure practices over time indicates a heightened awareness and commitment to the SDGs, potentially influenced by societal and regulatory pressures. This underscores the necessity for ongoing attention to sustainability and disclosure in light of increasing global interest and stakeholder demand.

This study offers valuable insights for private banking institutions and their leadership, underscoring the strategic importance of governance structures in shaping effective SDG disclosure. The empirical findings reveal that board independence is positively associated with SDG reporting, whereas larger board sizes appear to hinder it. These results suggest that governance characteristics can either enhance or impede stakeholder trust and institutional legitimacy. Accordingly, management teams should emphasize the integration of the SDGs into corporate sustainability strategies and reporting frameworks, ensuring coherence between governance practices and long-term sustainable objectives. Allocating resources to the development of integrated reports and to the external assurance of non-financial disclosures may serve as a credible signal of commitment, potentially yielding reputational and financial benefits in increasingly sustainability-oriented markets, while simultaneously reducing the risk of perceived greenwashing.

Moreover, the study provides actionable insights for investors and financial analysts. By considering the quality of SDG disclosure as an indicator of corporate accountability, stakeholders involved in sustainable finance may incorporate these governance-based determinants into portfolio construction and investment decision-making processes.

Finally, the implications extend to international and regional policy institutions, such as the United Nations and the Inter-American Development Bank. The evidence contributes to the understanding of sustainability practices among private-sector actors in a critical segment of the Latin American economy. Policymakers and regulatory bodies can leverage these findings to identify key drivers of sustainability reporting, prioritize relevant SDGs, and monitor the extent to which reporting practices align with global sustainability frameworks.

The research is subject to certain limitations. First, the study concentrates solely on 6 determinants of SDG disclosure at the firm level, excluding additional potential influences at the firm, institutional, or country levels that could affect SDG reporting and may be addressed by future research. Moreover, the present study relied on financial entities listed in the leading Latin American capital markets for an uninterrupted period of 7 years, from 2017 to 2023, with the COVID-19 pandemic occurring in between, which may have affected the information released by the entities during that period. Consequently, future research may incorporate different economic sectors and disclosures in post-pandemic periods. Although this research analyzes the most prominent banks in six Latin American nations, a study could be conducted within the same geographical environment involving other types of institutions or in other emerging countries. Finally, a quantity index has been examined as a dependent variable, which might be complemented by a more comprehensive analysis that includes models reinforcing the study and employing dependent variables related to SDG disclosure quality. While acknowledging the limitations presented, the study serves as a foundation for future research to expand the scope and enhance the depth of inquiry.

As the 2030 Agenda progresses, financial institutions must reinforce their dedication to sustainability as a means to bolster their reputation and legitimacy in the eyes of stakeholders. Transparency in SDG disclosure is thus a necessity for sustainable development in the region (Tsalis et al., 2020). While multiple studies have investigated the impact of firm-specific characteristics, reporting variables, and contextual factors on the decision to disclose commitment to the SDGs, further research is needed to explore the role that various determinants can play in an explanatory model.

This paper examined the non-financial determinants of SDG disclosure by banks in six Latin American countries from 2017 to 2023. The findings indicate that board independence, audits by the Big Four firms, and adherence to IIRC guidelines in non-financial reporting are all critical factors favoring transparency in SDG disclosure. Conversely, an inverse relationship has been identified between board size and sustainable disclosure, and between the proportion of female employees and SDG communication, implying that a smaller board with more male participation may be more effective in this domain. This research adds to the existing literature on sustainability and accountability in the financial sector by providing valuable insights for academics and practitioners aiming to refine disclosure standards.