This paper is part of the International Journal of Applied Research in Business and Management (ISSN: 2700-8983), Volume 6, Issue 1, published in 2025.
Authors
Nolwando Lawrance Mgilane, Haruna Maama, Ferina Marimuthu
Abstract
Environmental accounting has gained prominence as firms and stakeholders recognise its significance. Listed firms in South Africa are required to report about their environmental impacts. However, the implication of this directive on the financial sustainability of these firms have not been fully explored. As a result, this study explores the relationship between environmental accounting and financial sustainability among manufacturing companies listed on the Johannesburg Stock Exchange. The study used a content analysis method to collect environmental data from 50 South African listed manufacturing firms. Data were analysed using regression analysis. The results showed a significant negative link between environmental reporting and ROE, demonstrating that adopting environmental reporting costs manufacturing firms’ money and reduces their return on equity. In terms of ROA, the study found that environmental reporting had a positive but insignificant impact, implying that environmental reporting has an insignificant direct influence on ROA. These results imply that an increase in environmental reporting does not lead an increase in a firm’s ROA and ROE, reflecting the short-term challenges associated with the outflow of funds and resources required for environmental reporting adoption. However, in the long term, firms can benefit from adopting environmental reporting. This study contributes to the understanding of the nexus between environmental reporting and financial sustainability in the context of JSE-listed manufacturing firms.
Suggested Citation (APA 7th)
Mgilane, N., Maama, H., Marimuthu, F. (2025). Profit vs. Planet: Exploring the Financial Implications of Environmental Reporting on South African Firms. International Journal of Applied Research in Business and Management, 6(1). https://doi.org/10.51137/wrp.ijarbm.2025.nmpe.45770
