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Effect of Sustainability Practices on Financial Performance: Evidence From Firms Listed on the Johannesburg Stock Exchange

Effect of Sustainability Practices on Financial Performance: Evidence From Firms Listed on the Johannesburg Stock Exchange
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Author(s): James Gambrah (Kwame Nkrumah University of Science and Technology, Ghana), Richard Kofi Akoto (University of Professional Studies, Ghana), Ng'ang'a Gachara (Strathmore Business School, Kenya)and Dadson Awunyo-Vitor (Kwame Nkrumah University of Science and Technology, Ghana)
Copyright: 2025
Pages: 34
Source title: Diversity, AI, and Sustainability for Financial Growth
Source Author(s)/Editor(s): Huibrecht Margaretha van der Poll (University of South Africa, South Africa), John Andrew van der Poll (University of South Africa, South Africa)and Collins Chigaemecha Ngwakwe (University of Limpopo, South Africa)
DOI: 10.4018/979-8-3693-6011-8.ch012

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Abstract

This study examines the effect of sustainability practices on the financial performance of non-financial firms listed on the Johannesburg Stock Exchange (JSE). Using secondary data from the 2017 annual and sustainability reports of JSE-listed firms, specific indicators were selected as proxies for sustainability practices based on the firm's sustainability disclosures applying Global Reporting Initiative (GRI) standards. A cross-sectional dataset was constructed, and ordinary least squares (OLS) regression analysis was performed on data from 273 non-financial firms. The findings reveal a significant positive effect of total sustainability practices on financial performance, with each of the three sustainability dimensions. The study further observes that overall sustainability practices and disclosures among the firms analyzed are moderate, with a predominant focus on economic issues, followed by social and environmental considerations. Given these results, it is recommended that firms intensify their sustainability initiatives across all three dimensions to enhance financial performance.

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