Abstract
The Fast-Moving Consumer Goods (FMCG) industry is fast-paced and highly competitive, spanning manufacturing and retail. This industry also faces significant societal pressure and expectations that can affect its brand reputation. Over the years, Environmental, Social, and Governance (ESG) reporting has become mandatory for many companies; listed FMCG companies in South Africa are one such category.
This study investigated the internal and external drivers of target setting across eight FMCG companies using qualitative archival research. The selected companies represented the manufacturing and retail functions of the South African FMCG industry. An international manufacturing company with South African operations was also selected, as well as a multinational company similar to one of the South African retail companies. Integrated and sustainability reports for 2022-2024 were studied for this research. Atlas.ti research software was used to analyse the data, and themes were generated and discussed. Patterns in ESG target-setting approaches across the selected FMCG firms were also identified. Governance and strategic alignment, operational efficiency, purpose and goals, innovation and advancement, and organisational culture were identified as internal drivers influencing ESG target-setting in the eight selected FMCG companies. The external drivers influencing ESG target-setting were identified as: regulatory compliance; market pressure; environmental concerns; collaborative influences; and societal expectations. In addition to the drivers, the study also revealed that although FMCG retail companies may operate in the same environment, their approach to ESG target-setting differs, which may be attributed to their brand positioning. Companies from emerging markets are highly context-focused in their ESG target-setting approaches.
The findings confirm that although the FMCG industry may be highly influenced by regulation, society plays a vital role because these companies have reputations to maintain. The downside is the potential for greenwashing if companies cannot truly meet their targets. Academically, the study contributes to the literature on ESG in emerging markets by applying legitimacy theory and institutional theory to the specific context of the South African FMCG industry. It offers evidence of how global ESG norms are reinterpreted within local contexts and advances understanding of the socio-institutional drivers shaping sustainability decision-making in high-...