Assessing the business case for environmental, social and corporate governance practices in South Africa
Background: By focusing on sustainable financial and environmental, social and corporate governance (ESG) returns, companies and investors can do well by doing good. Despite growing interest in sustainable corporate practices, limited ESG-related research has been conducted in South Africa. Previous...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
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AOSIS
2019-11-01
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| Series: | South African Journal of Economic and Management Sciences |
| Subjects: | |
| Online Access: | https://sajems.org/index.php/sajems/article/view/2727 |
| _version_ | 1818902366354669568 |
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| author | Ruth Johnson Nadia Mans-Kemp Pierre D. Erasmus |
| author_facet | Ruth Johnson Nadia Mans-Kemp Pierre D. Erasmus |
| author_sort | Ruth Johnson |
| collection | DOAJ |
| description | Background: By focusing on sustainable financial and environmental, social and corporate governance (ESG) returns, companies and investors can do well by doing good. Despite growing interest in sustainable corporate practices, limited ESG-related research has been conducted in South Africa. Previous researchers have mainly focused on corporate governance. All three ESG aspects should, however, be addressed to ensure corporate sustainability. It is possible that the consideration of a composite ESG measure can conceal varying levels of consistency in the individual aspects.
Aim: The main objective was to investigate the relationship between ESG and corporate financial performance (CFP) measures.
Setting: Firms listed on the Johannesburg Stock Exchange between 2011 and 2016. A total of 66 firms were considered from six sectors.
Methods: Data for the sample (359 firm-year observations) were analysed by conducting panel regressions. In line with international research, ESG was considered as the independent variable, while eight measures of CFP were individually considered as the dependent variables. Composite and individual ESG disclosure scores were obtained from Bloomberg. The respective accounting-based, market-based and value-based CFP measures were sourced from IRESS.
Results: Two main trends emerged from this study. The majority of the significant relationships identified between variables were only observed: (1) once the composite ESG disclosure score was disaggregated and (2) when a distinction was made among sectors.
Conclusion: The empirical evidence suggests that ESG aspects are not homogeneous across sectors. Firm leaders should hence employ a differentiated approach to address the most important risks relevant to their operating environments. |
| first_indexed | 2024-12-19T20:34:30Z |
| format | Article |
| id | doaj.art-258309e990764c4bb02c5be6256228a1 |
| institution | Directory Open Access Journal |
| issn | 1015-8812 2222-3436 |
| language | English |
| last_indexed | 2024-12-19T20:34:30Z |
| publishDate | 2019-11-01 |
| publisher | AOSIS |
| record_format | Article |
| series | South African Journal of Economic and Management Sciences |
| spelling | doaj.art-258309e990764c4bb02c5be6256228a12022-12-21T20:06:34ZengAOSISSouth African Journal of Economic and Management Sciences1015-88122222-34362019-11-01221e1e1310.4102/sajems.v22i1.2727923Assessing the business case for environmental, social and corporate governance practices in South AfricaRuth Johnson0Nadia Mans-Kemp1Pierre D. Erasmus2Department of Business Management, Faculty of Economic and Management Sciences, Stellenbosch University, StellenboschDepartment of Business Management, Faculty of Economic and Management Sciences, Stellenbosch University, StellenboschDepartment of Business Management, Faculty of Economic and Management Sciences, Stellenbosch University, StellenboschBackground: By focusing on sustainable financial and environmental, social and corporate governance (ESG) returns, companies and investors can do well by doing good. Despite growing interest in sustainable corporate practices, limited ESG-related research has been conducted in South Africa. Previous researchers have mainly focused on corporate governance. All three ESG aspects should, however, be addressed to ensure corporate sustainability. It is possible that the consideration of a composite ESG measure can conceal varying levels of consistency in the individual aspects. Aim: The main objective was to investigate the relationship between ESG and corporate financial performance (CFP) measures. Setting: Firms listed on the Johannesburg Stock Exchange between 2011 and 2016. A total of 66 firms were considered from six sectors. Methods: Data for the sample (359 firm-year observations) were analysed by conducting panel regressions. In line with international research, ESG was considered as the independent variable, while eight measures of CFP were individually considered as the dependent variables. Composite and individual ESG disclosure scores were obtained from Bloomberg. The respective accounting-based, market-based and value-based CFP measures were sourced from IRESS. Results: Two main trends emerged from this study. The majority of the significant relationships identified between variables were only observed: (1) once the composite ESG disclosure score was disaggregated and (2) when a distinction was made among sectors. Conclusion: The empirical evidence suggests that ESG aspects are not homogeneous across sectors. Firm leaders should hence employ a differentiated approach to address the most important risks relevant to their operating environments.https://sajems.org/index.php/sajems/article/view/2727environmental practicessocial considerationscorporate governanceesgdisclosurecorporate financial performanceaccounting-basedmarket-basedvalue-based. |
| spellingShingle | Ruth Johnson Nadia Mans-Kemp Pierre D. Erasmus Assessing the business case for environmental, social and corporate governance practices in South Africa South African Journal of Economic and Management Sciences environmental practices social considerations corporate governance esg disclosure corporate financial performance accounting-based market-based value-based. |
| title | Assessing the business case for environmental, social and corporate governance practices in South Africa |
| title_full | Assessing the business case for environmental, social and corporate governance practices in South Africa |
| title_fullStr | Assessing the business case for environmental, social and corporate governance practices in South Africa |
| title_full_unstemmed | Assessing the business case for environmental, social and corporate governance practices in South Africa |
| title_short | Assessing the business case for environmental, social and corporate governance practices in South Africa |
| title_sort | assessing the business case for environmental social and corporate governance practices in south africa |
| topic | environmental practices social considerations corporate governance esg disclosure corporate financial performance accounting-based market-based value-based. |
| url | https://sajems.org/index.php/sajems/article/view/2727 |
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