Does Industry Type Moderate the Relationship between Energy Efficiency and Financial Performance of Firms Listed on the Johannesburg Stock Exchange?


  • Obey Dzomonda University of Limpopo


Earnings Per Share; Energy Efficiency; Financial Performance; Johannesburg Stock Exchange; Strategy; Sustainable Development


Objectives: The current study investigated the effect of energy efficiency on financial performance using industry type as a moderating variable. Prior Work: It has been discovered that there is an inconclusiveness of findings in existing literature regarding the link between energy efficiency and financial performance.  Approach: The study adopted a quantitate research method using secondary data. Panel data was collected for 8 years from 16 firms listed on the FTSE/JSE. The panel regression model was used to run the panel data. Specifically, the Feasible Generalized Least Squares was used, Results: The findings showed that attaining energy efficiency significantly and negatively influence financial performance (EPS) of the firms considered in this study.  Interestingly, the link between energy efficiency and financial performance (EPS) improved from negative to positive when the moderation effect of industry type was introduced. Implications: Practically, the findings of this study should assist managers of listed companies to invest in energy efficiency initiatives beyond just compliance but as a strategy to enhance operational efficiency and drive positive financial performance. Value: The novelty of this study is that it further tested the moderating effect of industry type on the energy efficiency and financial performance nexus which generated new empirical findings which were lacking in South Africa.


Abosedra, S., Shahbaz, M. & Sbia, R. (2015). The links between energy consumption, financial development, and economic growth in Lebanon: evidence from cointegration with unknown structural breaks. Journal of Energy, 2015(3), pp. 1-15.
Akinyemi, O., Alege, P., Ogundipe, A. & Osabuohien, E. (2016). Energy security and the green growth Agenda in Africa: Exploring trade-offs and synergies. Mediterranean Journal of Social Sciences, 7(1), pp. 375-382.
Al Shahrani, S. & Tu, Z. (2016). The impact of organisational factors on financial performance- Building a theoretical model. International journal of management science and business admin, 2(7), pp. 51-52.
Albertini, E. (2013). Does environmental management improve financial performance? A meta-analytical review. Organization & Environment, 26(4), pp. 431-457.
Andriof, J. & Waddock, S. (2017). Unfolding stakeholder engagement. In Unfolding stakeholder thinking (pp. 19-42). Routledge.
Asongu, S. A., Le Roux, S. & Biekpe, N. (2017). Environmental degradation, ICT and inclusive development in Sub-Saharan Africa. Energy Policy, 111, pp. 353-361.
Asongu, S., El Montasser, G. & Toumi, H. (2016). Testing the relationships between energy consumption, CO2 emissions, and economic growth in 24 African countries: a panel ARDL approach. Environmental Science and Pollution Research, 23(7), pp. 6563-6573.
Bacon-Shone, J.H. (2013). Introduction to quantitative research methods. Graduate School, The University of Hong Kong.
Bergmann, A., Rotzek, J. N., Wetzel, M. & Guenther, E. (2017). Hang the low-hanging fruit even lower-Evidence that energy efficiency matters for corporate financial performance. Journal of Cleaner Production, 147, pp. 66-74.
British Petroleum (BP), (2016). BP Statistical Review of World Energy June 2016. Available:
Cantore, N., Nussbaumer, P., Wei, M. & Kammen, D. M. (2017). Promoting renewable energy and energy efficiency in Africa: a framework to evaluate employment generation and cost effectiveness. Environmental Research Letters, 12(3), pp. 1-11.
Carabin, G., Wehrle, E. & Vidoni, R. (2017). A Review on Energy-Saving Optimization Methods for Robotic and Automatic Systems. Robotics, 6(4), pp. 1-21.
Chen, F., Ngniatedema, T. & Li, S. (2018). A cross-country comparison of green initiatives, green performance and financial performance. Management Decision, 56(5), pp. 1008-1032.
Cooke, T. E. (1989). Disclosure in the corporate annual reports of Swedish companies. Accounting and Business Research, 19(74), pp. 113-124.
De Jong, P., Paulraj, A. & Blome, C. (2014). The financial impact of ISO 14001 certification: top-line, bottom-line, or both? Journal of Business Ethics, 119(1), pp. 131-149.
Delmas, M. A., Nairn-Birch, N. & Lim, J. (2015). Dynamics of environmental and financial performance: The case of greenhouse gas emissions. Organization & Environment, 28(4), pp. 374-393.
Dinç, D.T. & Akdoğan, E.C. (2019). Renewable Energy Production, Energy Consumption and Sustainable Economic Growth in Turkey: A VECM Approach. Sustainability, 11(5), pp. 1-14.
Dodson, M. S., de Azevedo, D. B., Mohiuddin, M., Defavari, G. H. & Abrahão, A.F. S. (2015). Natural Environment and Future Generations as Stakeholders, the path for Sustainability.Desafio Online, 3(2), pp. 55-74.
Dzomonda, O. (2020). Stakeholder Engagement and Financial Performance of Firms Listed on the Johannesburg Stock Exchange (JSE). Journal of Reviews on Global Economics, 9, pp.446-458.
Endrikat, J., Guenther, E. & Hoppe, H. (2014). Making sense of conflicting empirical findings: A meta-analytic review of the relationship between corporate environmental and financial performance. European Management Journal, 32(5), pp.735–751.
Etikan, I., Musa, S. A. & Alkassim, R. S. (2016). Comparison of convenience sampling and purposive sampling. American Journal of Theoretical and Applied Statistics, 5(1), pp. 1-4.
Fan, L. W., Pan, S. J., Liu, G. Q. & Zhou, P. (2017). Does energy efficiency affect financial performance? Evidence from Chinese energy-intensive firms. Journal of Cleaner Production, 151, pp. 53-59.
Freeman, R. E. (2010). Strategic management: A stakeholder approach. Boston: Cambridge university press.
Ganda, F. (2016). Determinants of corporate green investment practices in the Johannesburg Stock Exchange (JSE) listed firm. Doctoral thesis, University of Limpopo.
Gentry, R.J. & Shen, W. (2010). The Relationship between Accounting and Market Measures of Firm Financial Performance: How Strong Is It? Journal of Managerial Issues,XXII(4), pp. 514-530.
Girmay, M.E. & Chikobvu, D. (2017). Quantifying South Africa's sulphur dioxide emission efficiency in coal-powered electricity generation by fitting the three-parameter log-logistic distribution. Journal of Energy in Southern Africa, 28(1), pp. 91-103.
Haninun, H., Lindrianasari, L. & Denziana, A. (2018). The effect of environmental performance and disclosure on financial performance. International Journal of Trade and Global Markets, 11(1-2), pp. 138-148.
International Energy Agency, (2019). Shaping a secure and sustainable energy future. Available:
Jha, M. K. & Rangarajan, K. (2020). Analysis of corporate sustainability performance and corporate financial performance causal linkage in the Indian context. Asian Journal of Sustainability and Social Responsibility, 5, pp.1-30.
Johannesburg Stock Exchange (2020). The JSE and Sustainability. Available:
Kammen, D.M. (2015). Peace through grids MIT Technology Review. Available:
Lu, W. & Taylor, M.E. (2016). Which factors moderate the relationship between sustainability performance and financial performance? A meta-analysis study. Journal of International Accounting Research, 15(1), pp.1-15.
Mail & Guardian (2021). The quest for renewable and sustainable energy. Available at:
Marashdeh, Z. M. S. (2014). The effect of corporate governance on firm performance in Jordan (Doctoral dissertation, University of Central Lancashire).
Martí-Ballester, C.P. (2017). Sustainable energy systems and company performance: Does the implementation of sustainable energy systems improve companies’ financial performance? Journal of Cleaner Production, 162, pp. S35-S50.
Mazzi, A., Toniolo, S., Manzardo, A., Ren, J. & Scipioni, A. (2016). Exploring the direction on the environmental and business performance relationship at the firm level. Lessons from a literature review. Sustainability, 8(11), pp.1-25.
Mohiuddin, M. (2014). Natural environment as stakeholder and sustainability. International Journal of Sustainable Society, 6(2), pp.1-15.
Owusu, P. A. & Asumadu-Sarkodie, S. (2016). A review of renewable energy sources, sustainability issues and climate change mitigation. Cogent Engineering, 3(1), pp.16-33.
Peura, P. (2013). From Malthus to sustainable energy-Theoretical orientations to reforming the energy sector. Renewable and Sustainable Energy Reviews, 19, pp.309-327.
Qian, W. (2012). Revisiting the link between environmental performance and financial performance: whocaresaboutprivatecompanies?Available:
Rodrigo, P., Duran, I. J. & Arenas, D. (2016). Does it really pay to be good, everywhere? A first step to understand the corporate social and financial performance link in Latin American controversial industries. Business Ethics: A European Review, 25(3), pp. 286-309.
Rokhmawati, A., Gunardi, A. & Rossi, M. (2017). How Powerful is Your Customers’ Reaction to Carbon Performance? Linking Carbon and Firm Financial Performance. International Journal of Energy Economics and Policy, 7(6), pp. 85-95.
Salvarli, H. & Salvarli, M. S. (2017). Trends on energy policy and sustainable development in Turkey. Energy Sources, Part B: Economics, Planning, and Policy, 12(6), pp. 512-518.
Scholtens, B. (2014). Indicators of responsible investing. Ecological Indicators, 36, pp. 382-385.
Selvam, M., Gayathri, J., Vasanth, V., Lingaraja, K. & Marxiaoli, S. (2016). Determinants of firm performance: A Subjective Model. International Journal of Social Science Studies, 4(7), pp. 90-100.
Shurig, S. (2015). Who will fund the renewable solution to the energy crisis? Available at:
Singh, R. (2016). An investigation into the drivers and barriers to energy efficiency within medium and large manufacturing firms operating within the eThekwini municipal area. (Doctoral dissertation, University of Pretoria).
Solnørdal, M.T. & Foss, L. (2018). Closing the Energy Efficiency Gap-A Systematic Review of Empirical Articles on Drivers to Energy Efficiency in Manufacturing Firms. Energies, 11, pp. 1-30.
Tang, M., Walsh, G., Lerner, D., Fitza, M. A. & Li, Q. (2018). Green Innovation, Managerial Concern and Firm Performance: An Empirical Study. Business Strategy and the Environment, 27(1), pp. 39-51.
Vasanth, V., Selvam, M., Lingaraja, K., Miencha, I.O. & Raja, M. (2015). Testing Environmental Kuznets Curve Hypothesis at firm level in India. Journal of Sustainable Development, 8(8), pp. 201-212.
Warra, L.W. & Oqdeh, S.K. (2018). Do Liquidity and Firm Size Affect Profitability and Does Capital Structure Play a Moderator Role: Study Based on Jordanian Data. International Research Journal of Finance and Economics, 170 (2018), pp. 27-40.
Whelan, T. & Fink, C. (2016). The Comprehensive Business Case for Sustainability. Available:
Zhang, S. (2016). Energy Efficiency and Firm Performance. Doctoral thesis, Swedish University of Agricultural Sciences.






Business Administration and Business Economics