The effect of environmental management activities on the financial performance of food processing companies listed on the Johannesburg Stock Exchange

Abstract

The study sought to investigate the effect of environmental management activities on the performance of JSE-listed food processing companies. Also, it seeks to identify environmental management activities that JSE-listed food processing companies conduct and the extent to which they reported their environmental management activities in their financial statements. The study involved 13 JSE-listed food processing companies and covered a ten-year period, ranging from 2012 – 2021. Quantitative data was obtained from the companies’ integrated financial statements published on their official websites. Findings show that the companies reported 15 different environmental management activities. Of the activities, water efficiency, Waste reduction, Greenhouse gas emissions, Energy reduction, and non-compliance with environmental legislations were the most reported by the companies. In contrast, environmental management systems, carbon tax, environmental non-compliance fees, environmental training, environmental community projects, nature reserves as well as air quality management and animal protection were the least reported. The fixed effect model panel data regression analysis and hierarchical regression analysis revealed that environmental management activities did not have significant relationship with the ROA and EPS of the JSE-listed food processing companies. The study recommends that other studies can use actual environmental costs instead of environmental management activities. JSE food processing companies are urged to participate in environmental management activities. The South African government should strengthen environmental legislative requirements that encourage companies to engage in the environmental management activities.