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The Impact of ESG on the Financial Performance of Johannesburg Stock Exchange-Listed Companies

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  • Wilfreda Indira Chawarura

    (Accounting Science Department, Midlands State University, Gweru, Zimbabwe
    School of Accounting, Economics and Finance, University of KwaZulu Natal, Durban 3629, South Africa)

  • Mabutho Sibanda

    (School of Accounting, Economics and Finance, University of KwaZulu Natal, Durban 3629, South Africa)

  • Kuziva Mamvura

    (School of Accounting, Economics and Finance, University of KwaZulu Natal, Durban 3629, South Africa)

Abstract

The relationship between ESG and firm performance is complex and tends to yield mixed results globally. In South Africa, ESG implementation is still in its infancy stage due to economic and developmental challenges. Despite these challenges, the JSE introduced sustainability disclosure guidelines in 2022 to enhance ESG adoption in South Africa. Thus, the study seeks to understand the impact of ESG and firm size on the financial performance of JSE-listed firms in South Africa. The study utilised the JSE Top 40 firms for the period from 2002 to 2022. Furthermore, the study employed a two-step System Generalised Method of Moments, to estimate the impact of total ESG and individual dimensions of ESG on firm financial performance. Additionally, the study examined the moderating effects of firm size on the relationship between financial performance and ESG. The results revealed a positive and significant relationship between total ESG and firm financial performance. However, the findings regarding individual ESG dimensions and firm performance are mixed. Firm size has a moderating effect on the relationship between ESG and firm financial performance. The implication of these findings for South Africa is increased foreign direct investment from green investors and listed firms seriously considering ESG in their operations.

Suggested Citation

  • Wilfreda Indira Chawarura & Mabutho Sibanda & Kuziva Mamvura, 2025. "The Impact of ESG on the Financial Performance of Johannesburg Stock Exchange-Listed Companies," Risks, MDPI, vol. 13(6), pages 1-25, June.
    • Handle: RePEc:gam:jrisks:v:13:y:2025:i:6:p:114-:d:1680749
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    References listed on IDEAS

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    2. Narula, Radhika & Rao, Purnima & Kumar, Satish & Matta, Rahul, 2024. "ESG scores and firm performance- evidence from emerging market," International Review of Economics & Finance, Elsevier, vol. 89(PA), pages 1170-1184.
    3. Riley, John G, 1979. "Informational Equilibrium," Econometrica, Econometric Society, vol. 47(2), pages 331-359, March.
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