An assessment of Environment, Social and Governance (ESG) implementation and firm performance of Johannesburg Stock Exchange-listed firms.

Abstract

This study assesses the implementation of Environment, Social, and Governance (ESG) practices and their impact on firm performance among companies listed on the Johannesburg Stock Exchange (JSE). As ESG factors increasingly influence corporate strategy and stakeholder decision-making, understanding their effect on financial and non-financial outcomes, such as ESG reporting styles used by listed firms, becomes essential. The study assesses the extent to which JSE-listed firms integrate ESG principles into their operations, governance structures, and reporting frameworks. It also examined the roles of government, regulators, and investors in ESG implementation. Using a combination of quantitative methods, including the system Generalised Method of Moments, qualitative content analysis on corporate disclosures, and scoping review methodology, the study examined the relationship between ESG implementation and key performance indicators, such as stock performance and market valuation. Additionally, the study examined impression management in ESG reports and chairman’s statements. Using scoping review methodology, the study assessed the South African government, regulators, and investors’ progress towards adopting ESG in their policies, laws, and investment decisions, as well as research output on ESG implementation in South Africa. This multi-method approach employed in this study enhanced the robustness of findings, offering both empirical and interpretive insights into ESG implementation challenges and successes. In addition, this methodological triangulation enhanced academic rigor while maintaining readability for industry practitioners. The findings suggest a positive correlation between strong ESG practices and improved financial performance, with firms demonstrating robust governance frameworks, environmental stewardship, and social responsibility achieving superior market returns and stakeholder trust. However, the study also identified challenges, including inconsistent ESG reporting, impression management, and varying quality of ESG disclosures across industries. The results underscore the increasing significance of ESG factors in corporate performance, underscoring the need for enhanced regulatory standards and greater transparency in ESG reporting. In addition, the study contributes to the body of literature on sustainable business practices and provides valuable insights for investors, policymakers, and corporate managers in navigating the evolving ESG landscape.