An assessment of environmental costs on financial performance : a case study of two plastic manufacturing companies in South Africa

Abstract

Environmental sustainability has become a somewhat, “trendy” expression for the corporate, public, private and government sectors. Different theoretical reviews and empirical research investigations have, in previous years, examined the relationship between environmental responsibility and financial performance, proving that further research is required. Subsequently, having better than average environmental costs and including financial performance is important for organisations to make sustainable progress in the long-term. Environmental cost activity is a high cost which usually affects a company's net profit. The study investigated two national plastic manufacturing companies in South Africa. The research objectives are to examine the relationship between environmental costs and financial performance, and to examine the effect of environmental costs on investors or stakeholders’ interest in the organisations. The research aims are to investigate the assessment of the environmental cost of plastic on financial performance at the two national plastics manufacturing companies in South Africa. The study utilised Stakeholder theory, which sees companies as a major aspect of a social system, while concentrating on different stakeholder groups in society. Additionally, the study focused on the two companies using their financial statements in the period between 2016 and 2019. Further statements were unavailable. The research used interpretative analysis because it includes precision and clearer comprehension of qualitative data. The unit of analysis are organisations of two plastic companies, the chosen criteria because they have an environmental cost, and their data is available on the public domain. A case study approach was utilised to get a more profound and extensive comprehension of the phenomena. The study found that an increase in environmental costs may influence financial performance and environmental costs. In addition, it contributed to research relating to the impact of plastic manufacturing companies’ environmental costs in South Africa. The study concluded that environmental costs have a positive and important effect on financial performance. The study recommends that the two companies should continue placing resources into environmental cost funds as much as practicable due to result in growth in financial performance.