Browsing by Subject "ESG"

Now showing 1 - 4 of 4
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    Open Access
    An inductive analysis of ESG practices and assumptions of materiality amongst South African asset managers
    (2020) Worthington-Smith, Matthew; Giamporcaro, Stephanie
    South Africa is a country burdened by the overhang of apartheid and recent state capture, and desperately trying to balance economic growth with well-being of all stakeholders. This has opened the door for ESG practices to provide holistic solutions for both society and business. This is made particularly relevant by applying business resources to the most relevant ESG issues facing companies, the focus of this study. To achieve the objective of promoting positive societal outcomes through better corporate engagement with ESG, the study analysed 22 asset managers, 25 companies and 25 earnings call transcripts for the opinions of asset managers, companies and analysts on which issues were material to them across five industries. Alongside this analysis, asset managers were interviewed for their opinion of ESG as it is currently practiced in the South African market, where they saw barriers to its practice and where potential improvements could be made. The study found alignment between asset managers and companies on the majority of material issues, but little alignment with analysts, suggesting a break-down in conversation between investors and companies. In particular, the issue of governance was stressed as the most important issue category by asset managers across all industries, but was given little air-time by both companies and analysts. These findings were consistent with the literature on investor perspectives of ESG, company ESG disclosure and materiality. The author suggests a model for materiality be developed to gauge company response to material ESG issues more consistently and aide engagement. Key words: ESG, sustainability, materiality, decoupling, disclosure
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    Open Access
    ESG and corporate financial performance: evidence from JSE listed firms
    (2022) Muzanya, Shelton; van Rensburg, Paul
    Business is an incredible social construct of the world, consisting of firms that are part of and arise from society. However, businesses have come under increasing scrutiny from internal and external stakeholders over sustainable business practices. A sustainable business model creates a balance between integrity, equity and financial prosperity, the so-called triple-bottom-line. Environmental, social and governance issues (ESG) have become the modern-day proxy for sustainable business practices. The relationship between sustainable business practices and corporate financial performance is a relatively new but prominent area of research in practice and academia in South Africa. This study explores the relationship between ESG disclosure performance and the corresponding corporate financial performance (CFP) for 70 sampled firms listed on the Johannesburg Stock Exchange (JSE) between the periods 2011 and 2019. In line with international and South African research, ESG in its composite and disaggregated form was considered against a select number of CFP metrics. Select accounting-, market- and qualitybased CFP metrics were considered. Quantitative research methods were employed, using panel regression models to investigate the ESG-CFP relationship where ESG was the independent variable while the CFP metrics were individually considered as the dependent variables. All CFP data was obtained from Bloomberg and Bloomberg's proprietary ESG scores were used. This study finds a statistically significant negative relationship between ESG and the selected CFP metrics. Upon disaggregating the ESG scores, it was evident that the E- and S-scores were also significantly and negatively related to the CFP metrics whilst the G-score was positively related to CFP, but it was not statistically significant. The empirical evidence suggests that over a nine-year investment horizon, higher ESG disclosure performance detracts from firm fundamental and market performance. Further interpretation of the results in conjunction with the literature may suggest that ESG ought to be seen as an insurance policy against excessive underperformance during volatile periods and not a CFP enhancer. Therefore, being “over-insured with ESG” may lead to underperformance.
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    Open Access
    The effect of ESG scores on corporate financial performance: case study on South Africa
    (2025) Choga, Simba Michael; Ndlovu, Godfrey
    This study seeks to examine the relationship between environmental, social and governance (ESG) scores and firm performance: using both accounting and market-based measures of firm performance. This research is important because it allows for valuable insights for investors and the local government, enabling them to navigate the complex environment of ESG disclosure and financial performance. Although the bulk of the evidence suggests the existence of a positive relationship between ESG scores and firm performance, a few studies find a negative relationship. Further, most research primarily use the combined ESG score and thus ignore the fact that the effect of the ESG subcomponents may vary. Using a panel of 38 JSE-listed firms over the period 2010 to 2022, the results from this study suggest existence of a negative but insignificant relationship between ESG scores and firm performance; regardless of the measure of performance used. Similar results are also found for the ESG subcomponents. The results suggest that firms engaged in ESG activities experience a negative effect on their profitability and market value. This would suggest that the push for ESG efforts negatively affects JSE-listed firms' performance which aligns with some previous research. Therefore, JSE-listed firms should consider investing less in ESG practices to improve firm performance.
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    Open Access
    The relationship between ESG disclosure and corporate financial performance: a comparative study among developed and emerging markets companies
    (2025) Liang, Yanni; Pitt, Lucian
    This study examines the impact of companies' environmental, social and governance (ESG) disclosure on corporate financial performance. It also compares this relationship among developed and emerging markets companies. The study was based on ESG scores from data obtained from Bloomberg. The sample data consisted of information from 2145 developed and 2023 emerging companies from 2015 to 2022. Using a Fixed-Effects panel regression model, the research results indicate that developed market companies represent higher ESG combined and sub-component scores than emerging market companies. This study finds that developed market companies' ESG performance is positively associated with financial performance (ROA) and market valuation (Tobin's Q). Companies in emerging markets showed a positive relationship between ESG scores and market valuation (Tobin's Q). Results also indicated a neutral relationship between ESG initiatives and emerging markets companies' ROA. Thus, the study implies that ESG investment is still in the early stage in emerging markets with room for growth, while developed market ESG performance is leading the way in terms of its impact on company performance. The results indicate that whilst the market recognises the potential benefit of ESG investment, it still has some way to go regarding translation into the company's book performance. This has significant implications for investment decisions. This study fills an existing gap in literature in understanding the relationship between company performance and investment in ESG, especially as it pertains to the difference in this relationship between companies in emerging and developed economies.