Abstract
CSR is a topic that has been widely researched over the years, with various academics arriving at contradicting conclusions. Furthermore, there is very little evidence or research on the concept of CSR in South Africa, let alone in the South African mining context. Kloppers and Du Plessis (2008) explain that CSR in the mining industry of South Africa only started receiving serious attention after the implementation of the Constitution of the Republic in 1996, along with legislation such as the Mineral and Petroleum Resources Development Act 28 of 2002.
This study found that the mining industry has been one of the largest contributors to the poverty conditions of the black community. Once apartheid had been confronted, there was an increasing need for the government and mining companies alike to start reparations and transform the industry for the betterment of the black communities affected. One of the methods that were used to achieve this objective was the implementation of various CSR practices. Freeman’s stakeholder theory supports the assertion that it is the duty of a company to look after all of its stakeholders and not just its shareholders. One of the tensions that led to this theory was a result of the reluctance of shareholders to invest in CSR, citing that it may not benefit the performance of a company or add any shareholder value.
The study’s main aim is to investigate the relationship between CSR and shareholder value in the South African mining industry and to investigate whether investing in socially responsible mining companies yields shareholder value. Considering the history of the mining industry, the less-than-ideal working conditions, and the impact of company operations on the various stakeholders, this study provides evidence on whether these efforts are yielding benefits for the shareholders. To achieve this, the study used 12 mining constituents, both listed on the JSE and in the JSE/FTSE Russell Responsible Investment Index. Using a panel regression model, shareholder value (represented by share price, dividends paid and return data) was modelled using each company’s Responsible Investment Index.
The study found that there is no relationship between CSR and shareholder value, where shareholder value is represented by share price and dividends, respectively. Inversely, the study found that there is, however, a statistical relationship between CSR and shareholder value, where shareholder value is represented by return data. The study provided conflicting results and a lack of consistency even in the South African context. Although these results are similar to some of the research already published, it underscores the continued research gap in this field, which this study intends to contribute to. The study was intended to contribute to the argument and guide companies to determine whether there is any value in their contributions and investment in CSR.
Key words
Corporate social responsibility; responsible investment index; shareholder value; mining constituents; shareholder value; south Africa; apartheid.