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2023 | OriginalPaper | Buchkapitel

7. An Empirical Analysis of ESG and Corporate Performance in South Africa

verfasst von : Karamo NM Sonko, Mariama Sonko

Erschienen in: Demystifying Environmental, Social and Governance (ESG)

Verlag: Springer International Publishing

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Abstract

An empirical analysis of the relationship between ESG and corporate performance is carried out in this chapter, using South Africa as a case study. We cover the period from 2008 to 2018, using data for a total of 140 companies on the Johannesburg Stock Exchange (JSE). Our findings reveal that ESG disclosures are positively associated with financial and environmental performances and corporate governance is also positively related to financial performance.

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Fußnoten
1
With regard to political parties, the Electoral Commission of South Africa (IEC) announced on 20 March 2019 48 parties had registered to contest the national parliamentary elections. According to Wikipedia, the total number of parties (including those without a seat in parliament) is about 100, excluding defunct names. https://​en.​wikipedia.​org/​wiki/​List_​of_​political_​parties_​in_​South_​Africa.
 
2
For example, FDI inflows to the whole of Africa reached $83 billion in 2021, more than half of which ($42 billion) went to Southern Africa, almost all to South Africa with $41 billion, putting the country among the top 8 destinations in the world. See UNCTAD, World Investment Report 2022, UNCTAD, Geneva, 2022.
 
3
The JSE had 294 companies on the 15 January 2023, https://​www.​jse.​co.​za/​.
 
4
This chapter is part of a much broader study, in which we assess sustainability variables (GRI-guidelines) and time dummy variables (2012/2016). We categorize the firms according to industry practices, by singularly dividing the sample into polluting (85) and non-polluting (55) companies, thus totaling 140 firms, 1140 observations, for 10 years. Thereafter, the fixed model effect was utilized in order to analyse the data. The interested reader may refer to Mariama Sonko, “The Effects of Environmental, Social and Governance (ESG) Disclosure and Performance on Firm Value: Evidence from South African Listed Firms,” dissertation submitted in partial fulfilment of the requirements for the degree of MSc. at Heriot‐Watt University, Dubai Campus, 21/8/2019. In this study, ESG disclosures are measured individually (E, S, G) and in sum. This was done to achieve an adequate comparison of ESG disclosures measured separately and in sum over designated periods.
 
5
For the more extensive study with five equations and a more elaborate methodology, the interested reader may refer to Mariama Sonko, ibid.
 
6
A very extensive list of definitions of all variables in seven pages is available as an appendix from the authors.
 
7
More recent evidence on South Africa and the other countries can be found in Chapter 6.
 
8
The correlation matrix is from the original study (Sonko, ibid.), which measures ESG disclosures separately and in sum, board variables, CO2 emissions, control variables, and sustainability-oriented variables.
 
9
For a more extensive study with five equations and a more elaborate methodology, the interested reader may refer to Sonko, ibid.
 
10
A research report by the World Bank Group (WBG) and the Government Pension Investment Fund (GPIF) of Japan on ESG and fixed income funds specifically states that “evidence suggests that incorporating ESG.
into fixed income investing should be part of the overall credit risk analysis and should contribute to more stable financial returns. It also dispels the myth that incorporating ESG means having to sacrifice financial returns” (Georg Inderst and Fiona Stewart, Incorporating Environmental, Social, and Governance (ESG) factors into Fixed Income Investment. Washington, DC: GPIF & World Bank Group, 2018).
 
11
Raisa Almeyda and Asep Darmansyah, “The Influence of Environmental, Social, and Governance (ESG) Disclosure on Firm Financial Performance,” IPTEK Journal of Proceedings, Series No. 5 (2019): 278–290.
 
12
For case for why ESG leades to higher value for companies, see for instance, Witold Henisz, Tim Koller, and Robin Nuttall, “Five Ways That ESG Creates Value,” Mckinsey Quarterly, November 2019.
 
13
See study mentioned in footnotes 4, 5, 8, and 10.
 
14
Sonko, Karamo NM, and Mariama Sonko, “Promoting Islamic Banking in Africa: Top Bottom or Bottom Up? A Case Study of Banking in the Gambia,” in Islamic Finance as a Complex System, eds. Haider A. Khan, and Karamo NM Sonko. Lanham, MD: Lexington Books, 2020.
 
Metadaten
Titel
An Empirical Analysis of ESG and Corporate Performance in South Africa
verfasst von
Karamo NM Sonko
Mariama Sonko
Copyright-Jahr
2023
DOI
https://doi.org/10.1007/978-3-031-35867-8_7