Environmental Sustainability Commitment and Financial Performance of Firms Listed on the Johannesburg Stock Exchange (JSE).

Obey Dzomonda,Olawale Fatoki

doi:10.3390/ijerph17207504

Abstract

The importance of heeding the environmental sustainability commitment call cannot be underestimated. Laggards in terms of environmental sustainability commitment are likely to face fines and penalties as talks to tighten environmental legislation are now at an advanced stage globally. The current work assessed the link between environmental sustainability commitment and financial performance of firms listed on the Johannesburg Stock Exchange (JSE). The study was quantitative in nature with a case study research design. The longitudinal design was adopted where the researcher collected panel data from 2011–2018. The population of the study included all firms listed on the JSE Responsible Investment Index in South Africa. The sample constituted of 32 firms listed on the Financial Times Stock Exchange FTSE/JSE Responsible Investment Index in South Africa. The researchers employed the panel regression analysis model to analyze the data. Specifically, the Feasible Generalized Least Squares regression model was used in this study. Financial performance was treated as the dependent variable as measured by earnings per share and share price. The independent variables of the study included components of environmental sustainability such as carbon emission reduction and environmental compliance. Control variables such as firm size and liquidity were used in the study. The findings indicated that carbon emission reduction was positively and significantly related to earnings per share and share price. The findings further exhibited that environmental compliance was positively related to earnings per share and share price. It was concluded that firms can enhance their financial performance from environmental investment as all the hypotheses were supported. This study contributes practically towards shaping environmental policies and it also serves as motivation to listed companies that they can enhance both their profitability and market value from environmental investments.

Highlights

The issue of environmental sustainability commitment has become a famous topic recently [1]and it is highly emphasized in the sustainable development goals (SDGs) on both agenda 2030 and 2063 [2]
Based on the findings presented above, one can infer that environmental sustainability commitment variables such as carbon emission reduction and environmental compliance enhances the financial performance of listed firms when the share price is considered
This study aimed at examining the relationship between environmental sustainability commitment and financial performance of firms listed on the Johannesburg Stock Exchange (JSE)

Summary

Introduction

The issue of environmental sustainability commitment has become a famous topic recently [1]. It is highly emphasized in the sustainable development goals (SDGs) on both agenda 2030 and 2063 [2]. Sustainability can be summarized into three pillars which are economic, society and the environment [3]. The focus of the current study is on environmental sustainability practices of firms listed on the Johannesburg Stock Exchange (JSE). There is a serious need to adopt a proactive stance towards protecting the environment [5]. This is because of the reported cases of climate change which have long been felt globally. In South Africa, other catastrophes such as floods and heat waves

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Discussion

Conclusion