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The Impact of Carbon Emissions on Corporate Financial Performance: Evidence from the South African Firms

Fortune Ganda () and Khazamula Samson Milondzo ()
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Fortune Ganda: Turfloop Graduate School of Leadership, Faculty of Management and Law, University of Limpopo, Fauna Park, Polokwane 0787, South Africa
Khazamula Samson Milondzo: Turfloop Graduate School of Leadership, Faculty of Management and Law, University of Limpopo, Fauna Park, Polokwane 0787, South Africa

Sustainability, 2018, vol. 10, issue 7, 1-22

Abstract: The impact of carbon emissions on corporate financial performance within the African corporate setting has remained open and inconclusive, owing primarily to the unavailability of data. However, this paper examines the effect of carbon emissions (Scope 1, Scope 2, and Scope 1 and 2) on the financial performance (ROE, ROI, and ROS) of 63 South African CDP companies for the 2015 fiscal year. Using multiple regression techniques, the paper found overwhelming evidence of a negative relationship between carbon emissions and corporate financial performance. Thus, results indicate that companies which integrate green investment initiatives designed to lower carbon emissions can effectually manage financial performance. Therefore, the paper provides useful insights on how companies can fully utilise their organisational resources and capabilities as well as gain insight, resulting in a higher environmental and financial performance within a firm.

Keywords: carbon emissions; corporate financial performance; South African CDP firms (search for similar items in EconPapers)
JEL-codes: Q Q0 Q2 Q3 Q5 Q56 O13 (search for similar items in EconPapers)
Date: 2018
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