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

Author

Listed:
  • Obey Dzomonda

    (Department of Business Management, Turfloop Campus, University of Limpopo, Private Bag X1106, Sovenga 0727, South Africa)

  • Olawale Fatoki

    (Department of Business Management, Turfloop Campus, University of Limpopo, Private Bag X1106, Sovenga 0727, South Africa)

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.

Suggested Citation

  • Obey Dzomonda & Olawale Fatoki, 2020. "Environmental Sustainability Commitment and Financial Performance of Firms Listed on the Johannesburg Stock Exchange (JSE)," IJERPH, MDPI, vol. 17(20), pages 1-21, October.
    • Handle: RePEc:gam:jijerp:v:17:y:2020:i:20:p:7504-:d:428441
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    References listed on IDEAS

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    2. Maria Aparecida Hess Loures Paranhos & Irenilza de Alencar Nääs & Pedro Luiz de Oliveira Costa Neto, 2024. "Evolution and Challenges of Environmental, Social, and Governance Practices: An Analysis of the Brazilian Stock Exchange’s Corporate Sustainability Index," Sustainability, MDPI, vol. 16(15), pages 1-12, July.
    3. Obey Dzomonda, 2022. "Environmental Sustainability Commitment and Access to Finance by Small and Medium Enterprises: The Role of Financial Performance and Corporate Governance," Sustainability, MDPI, vol. 14(14), pages 1-20, July.
    4. Rabab Ali Abumalloh & Mehrbakhsh Nilashi & Keng Boon Ooi & Garry Wei-Han & Tat-Huei Cham & Yogesh K. Dwivedi & Laurie Hughes, 2024. "The adoption of metaverse in the retail industry and its impact on sustainable competitive advantage: moderating impact of sustainability commitment," Annals of Operations Research, Springer, vol. 342(1), pages 5-46, November.

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