A framework for corporate sustainability investment, resource efficiency and profitability of companies listed in FTSE/JSE responsible investment index

Abstract

Corporate sustainability rank among leading factors in the agenda for many companies, given that they are compelled to report on it. Thus, companies make investments in activities that concern corporate sustainability to enforce compliance but make profits. Therefore, this study evaluated the effect of corporate sustainability investment (environmental investment and social investment) on resource efficiency (water and energy consumption) and profitability (net profit and asset return) of companies listed in the FTSE/JSE Responsible Investment Index. The study adopted quantitative and qualitative methods to generate primary data and secondary data. The primary data was collected through questionnaires while the secondary data was collected from annual integrated reports of participant companies. The secondary data was analysed through multiple regression statistics, and primary data was analysed through thematic analysis. Findings from this study indicate that environmental sustainability investment (renewable energy investment, water investment and recycling investment) negatively affected resource efficiency (water consumption and energy consumption). Also, there existed a positive relationship between corporate social investment and resource efficiency, a positive impact of corporate environmental investment on profitability, and a positive influence of corporate social investment on profitability. Moreover, corporate profitability and eco-efficiency motivated investment in sustainability. Based on these findings, the study contributes to knowledge by developing a new framework of corporate sustainability investment, resource efficiency and profitability. The study recommends that companies should intensify their investment in corporate sustainability to assist in environmental resource conservation and increase in profitability. Furthermore, this study recommend that other research apply the developed framework in wider research across other industries.