Abstract
M.Com. (Business Management)
South African companies now realise that they have a responsibility to ensure that
the natural resources as well as the people living within the communities in which
they operate must be preserved and nurtured to ensure that future generations enjoy
their benefits as much as the current generation does today. Companies are under
ever-increasing pressure from both internal and external stakeholders to consider the
environmental and social impacts of their operations and to mitigate these impacts.
To this end, sustainable development (SD) has gained significant importance and the
reporting of sustainability performance is the means by which companies
communicate their efforts to their stakeholders. This study analyses the relationship
between sustainability performance and financial performance to ascertain whether
the ‘business case’ for sustainability exists in South African listed companies.
There has been a substantial amount of research on the topic of SD and its
implications for companies; the focus for this study however is on whether
sustainability initiatives are important indicators of financial performance. Research
conducted by Montabon, Sroufe and Narashiman (2007:998), assessed the
relationship between corporate reporting, environmental management practices and
company performance, however the unit of analysis was North American, British and
Australian companies. This study will replicate the study of Montabon et al, with a
focus on South African Johannesburg Stock Exchange (JSE) listed companies. In
addition, comparisons will be drawn between developed world companies and
companies within an emerging market. Pertinent literature on the topic has been
reviewed and the results will be compared to the work of Artriach, Lee, Nelson, and
Walker, J. (2010); Reed (2001) as well as Porter and van der Linde (1995).
The results of the study reveal that an overall positive relationship exists between
sustainability performance and financial performance thus, the research supports the
notion that efforts to preserve and nurture environmental and human resources lead
to improved financial performance.