Investment in hazardous solid waste reduction and financial performance of selected companies listed in the Johannesburg Stock Exchange Socially Responsible Investment Index

Abstract

The study examines the influence of investment in hazardous solid waste reduction on companies' financial performance. The challenge is that investment in hazardous solid waste reduction is traditionally considered an unnecessary cost to companies, with investors critical of such an undertaking because they perceive it to have insignificant or no returns. The study sampled 64 mining and manufacturing companies listed on the Social Responsibility Investment Index of the Johannesburg Stock Exchange from 2008 to 2017. Using Panel Data analysis, the results indicate that any investment in hazardous solid waste of the sampled companies is too insignificant to explain the changes in return on assets. The results, however, show that the current ratio is sufficiently significant to influence the return on assets. The results indicate that hazardous solid waste disposal through targeted investment decreases the risk of future liabilities, for instance, environmental litigation, strikes and fines for environmental damage, and could significantly affect the return on assets. The results suggest that hazardous solid waste reduction requires a substantial long-term financial commitment for process change. An example of one such process change is the complete automation for improved efficiency. A short-term approach is ultimately detrimental to tackling long-term hazardous solid waste reduction issues.