Green investment nexus eco-efficiency and firm value: Evidence from top 40 JSE-listed firms

Abstract

This study aims to investigate the connection between green investment, eco-efficiency, and firm value amidst increased global emphasis on environmental sustainability. The study used a generalised method of moments (GMM) to analyse a panel of the top 40 listed companies on the Johannesburg Stock Exchange (JSE) from 2015 to 2022. The top 40 listed companies represent 80% of the total listed companies on JSE market capitalisation. The findings show that green investment's effect on eco-efficiency and firm value is positive and statistically significant. This indicates that there are plenty of chances for South African businesses, especially the top 40 listed firms, to lead and innovate in the green economy, given the continued emphasis on sustainability and green growth, which will improve reputation and risk management and increase operational efficiency. The overall implication is that, in the long run, these investments will strengthen the financial stability and resilience of businesses, in addition to mitigating environmental effects. A competitive advantage can result from strategically integrating green practices, which promotes regional sustainable development. The paper offers insightful empirical data from the context of emerging markets, notably South Africa. The research on green investment, which primarily focuses on developed economies, frequently underrepresents emerging markets. The study broadens our knowledge of how green investment affects corporate performance and environmental effects in a distinct regulatory and economic context by analysing the JSE.