Analysing ESG Compliance and Financial Performance in the Mining Sector in South Africa
Keywords:
ESG compliance; financial performance; mining sector, South Africa; Panel ARDLAbstract
Investors and policymakers in emerging markets face a critical question. Does ESG compliance truly enhance shareholder value in resource-intensive sectors, or do traditional financial factors dominate market valuations? This question is particularly urgent in the South African mining industry, where companies face increasing pressure to demonstrate environmental and social responsibility while maintaining profitability. This study used stock price returns as a performance measure to investigate the dynamic short- and long-term relationships between ESG compliance and financial performance in the South African mining sector. The study applied Panel Autoregressive Distributed Lag with Pooled Mean Group estimation to monthly data from 13 JSE-listed mining companies operating and headquartered in South Africa between 2015 and 2022. The findings revealed a significant positive long-term relationship between ESG scores and stock prices, an effect absent in the short term, demonstrating that the ESG value materialized gradually. Inflation showed a strong positive long-term effect, confirming mining stocks as inflation hedges, while GDP growth exhibited an unexpected negative relationship. Short-term stock prices responded to lagged firm size changes and current inflation, while ESG showed no immediate impact. This study provides crucial empirical evidence from South Africa’s mining sector that ESG compliance operates as a long-term value.
References
Alves, R., Krüger, P., & Dijik, M. V. (2025). Drawing up the bill: Are ESG ratings related to stock returns around the world? Journal of Corporate Finance, 93(1), 20.
Amundi. (2024). PRI 2024 – Once again rewarded for our responsible investment strategy. https://about.amundi.com/article/pri-2024-once-again-rewarded-our-responsible-investment-strategy
Atal, M. R. (2017). White capital: Corporate social responsibility and the limits of transformation in South Africa. The Extractive Industries and Society, 4(4), 773-786.
Aydoğmuş, M., Gülay, G., & Ergun, K. (2022). Impact of ESG performance on firm value and profitability. Borsa İstanbul Review, 22(4).
Bernardes, P. M. M., Brandalise, N., & Bonamigo, A. (2024). Relationship between financial performance and corporative governance of mining, oil and gas companies. Gestão & Produção, 31.
Bertelli, B., & Torricelli, C. (2024). The trade‑off between ESG screening and portfolio diversification in the short and long run. https://research-ebsco-com.nwulib.idm.oclc.org/c/vzpwef/viewer/pdf/x6dlwivmi5
Bester, V., & Uys, T. (2023). Artisanal mining and its drivers in the South African context. The Extractive Industries and Society, 15, 101278.
Bilivogui, P., & Iqbal, M. A. (2025). Do ESG scores matter? An empirical analysis of corporate financial performance in BRICS economies. Environmental Research Communications, 7(6), 065023.
Cawood, F. T., Fenn, A. G., Grobbler, H. C. I. & McDougall, D. J. (2024). Sustainability and South Africa’s mature mines: The innovation imperative. Green and Smart Mining Engineering, 1(3), 296-305.
Chevereley, M. (2025). Ninety One’s green shift: Driving ESG in South African investment. Business Day. https://ninetyone.com/en/south-africa/people/george-cheveley
Cole, M. J. (2023). ESG risks to global platinum supply: A case study of Mogalakwena Mine, South Africa. Resources Policy, 85, 104054.
Coronation Fund Managers. (2024). Why we’ve been diversifying our portfolios with gold. https://www.coronation.com/en-za/personal/latest-insights/investment-views/why-weve-been-diversifying-our-portfolios-with-gold/
Deng, W., Kharuddin, S., & Ashhari, Z. M. (2024). Green finance transforms developed countries’ green growth: Mediating effect of clean technology innovation and threshold effect of environmental tax. Journal of Cleaner Production, 448, 141642e.
Department of Mineral Resources and Energy, South Africa (DMRE). (2019). Integrated Resource Plan (IRP 2019). https://www.dmre.gov.za/Portals/0/Energy_Website/IRP/2019/IRP-2019.pdf
Diaye, M. A., Ho, S. H., & Oueghlissi, R. (2021). ESG performance and economic growth: a panel co‑integration analysis. Empirical Economics. https://link-springer-com.nwulib.idm.oclc.org/content/pdf/10.1007/s10663-021-09508-7
Dlamini, B. (2024). Environmental, social and corporate governance investment on organizational sustainability: A case of the South African mining sector. Johannesburg: University of the Witwatersrand. https://hdl.handle.net/10539/43583
Drobetz, W., Ghoul, S. E., Guedhami, O., Hackmann, J. P., & Momtaz, P. P. (2024). Entrepreneurial finance and sustainability: Do institutional investors impact the ESG performance of SMEs? Journal of Business Venturing Insights, 22, 00498e.
Eccles, R. G., Lee, L. E., & Stroehle, J.C. (2020). The Social Origins of ESG: An Analysis of Innovest and KLD. Organization & Environment, 33(4), 575-596.
eNCA. (2024). Stilfontein Illegal Mining | 27 Children Repatriated to Mozambique. https://www.enca.com/news/stilfontein-illegal-mining-27-children-repatriated-mozambique
eNCA. (2025). No accountability for Marikana massacre 13 years later. https://www.enca.com/top-stories/no-accountability-marikana-massacre-13-years-later
Esparcia, C., & Gubareva, M. (2024). ESG rating changes and portfolio returns: A wavelet analysis across market caps. Finance Research Letters, 63, 105306e.
Evans, D., Kramer, G. A., Lanfranchi, M., & Brijlal, P. (2023). Environmental, Social and Corporate Governance (ESG) on the financial performance of listed mining firms in South Africa. https://research-ebsco-com.nwulib.idm.oclc.org/c/vzpwef/viewer/pdf/ycsroqktjr
Feng, G-F., Long, H., Wang, H-J., & Chang, C-P. (2022). Environmental, social and governance, corporate social responsibility, and stock returns: What are the short- and long-run relationships? https://research-ebsco-com.nwulib.idm.oclc.org/c/vzpwef/viewer/pdf/ycsroqktjr
Fikru, M. G., Brodmann, J., Eng, L. L., & Grant, J. A. (2024). ESG ratings in the mining industry: Factors and implications. The Extractive Industries and Society, 20, 101521e.
Freeman, R. E. (1984). Strategic management: A stakeholder approach. Pitman.
Galema, R., & Gerritsen, D. (2025). ESG rating changes and stock returns. Journal of International Money and Finance, 154, 103309e.
Garcia-Zavala, C., Irdens, C. M., Pagliero, L., Lèbre, É., Aitken, D., & Stringer, M. (2023). An approach for prioritising environmental, social and governance (ESG) water-related risks for the mining industry: The case of Chile. The Extractive Industries and Society, 14, 101259e.
Ghouse, G., Iqbal, M. & Cucchiella, F. (2025). Non-linear impacts of productive capacity on organizational sustainability: an analysis of Next-11 countries with ESG moderation. Baltic Journal of Management, 20(3).
Hector, M. (2025). Greening Industrial Policy in South Africa: Insights from China, the United States and the European Union. Working Paper. https://www.tips.org.za/research-archive/sustainable-growth/item/download/2638_672e8be364128218fedccec45c0852a0
Huang, L. (2024). Green bonds and ESG investments: Catalysts for sustainable finance and green economic growth in resource-abundant economies. Resources Policy, 91, 104806oe.
Husnah. (2023). Integrating environmental, social and governance (ESG) disclosure on financial performance of Indonesian mining industry sector. Journal of Applied Business and Management, 15(2), 123-135.
Johannesburg Stock Exchange (JSE). (2024). Climate Disclosure Guidance. https://group.jse.co.za/sustainability/climate-disclosure-guidance
Kao, C. (1999). Spurious Regression and Residual-Based Tests for Cointegration in Panel Data. Journal of Econometrics, 90(1).
Kenton, W. (2025). Gross Value Added (GVA): Definition, Formula, and Example. https://www.investopedia.com/terms/g/gross-value-added.asp
Khamisu, M. S., & Paluri, R. A. (2024). Emerging trends of Environmental Social and Governance (ESG) disclosure research. Cleaner Production Letters, 7(1).
Kim, A., & Yoon, A. (2021). At a glance: ESG and investing in South Africa. https://acfr.aut.ac.nz/__data/assets/pdf_file/0005/576977/Aaron-Yoon-Kim-and-Yoon-2021_0427.pdf
Kräussl, R., Oladiran, T., & Stefanova, D. (2024). A review on ESG investing: Investors’ expectations, beliefs and perceptions. https://research-ebsco-com.nwulib.idm.oclc.org/c/vzpwef/viewer/pdf/ycsroqktjr.
Laker, M. C. (2023). Environmental Impacts of Gold Mining—With Special Reference to South Africa. Mining, 3(2), 325.
Liang, H., Sun, L., & Teo, M. (2022). Responsible investing: ESG versus sin stocks. The Review of Financial Studies, 36(7), 2873-2911.
Liefferink, M. (2016). Rehabilitation of Mine Contaminated Eco-systems. https://www.tips.org.za/just-transition/item/download/2053_22c0b6c695e8ba91b1fdbf83cfd8d6a2
Lopez-de-Silanes, F., McCahey, J. A., & Pudschedl, P. C. (2024). Institutional Investors and ESG Preferences. Corporate Governance: An International Review, 32(6), 1095-1120.
Magubane, K., & Wesi, B. (2023). Measuring the impact of ESG investing on the stock performance of JSE-listed financial service providers during the Covid-19 pandemic. International Journal of Research in Business and Social Science, 12(9).
Malik, N., & Kashiramka, S. (2025). ESG disclosure and its impact on firm leverage: Moderating role of quality of financial reporting and financial constraints. Global Finance Journal, 65, 101099e.
Matemane, R., Msomi, T., & Ngundu, M. (2024). Environmental, social and governance and financial performance nexus in South African listed firms. South African Journal of Economic and Management Sciences, 27(1).
Maulidya, P., Azis, M. T., & Djajuli, M. (2025) The Effect of Sustainability Report Disclosure on Stock Prices: An Educational Review. Journal Corner of Education, Linguistics, and Literature, 5(001).
Mouffok, M. A., & Mouffok, O. (2025). Wavelet-quantile analysis of the nexus between economic policy uncertainty and sustainable markets: An ESG context. Journal of Cleaner Production, 451, 145789e.
Munsie, T. (2025). Allan Gray’s ESG integration strategy for sustainable value. https://www.allangray.co.za/latest-insights/local-investing/defensively-positioned-to-navigate-challenges/
Mustaffa, A. H., Muda, R., Bahrudin, N. Z., & Malik, H. K. A. (2023). A meta-analysis of ESG disclosure and listed companies’ financial performance, In Said, J., Arshad, R. and Al-Jubari, I. (eds.) Building a Sustainable Future, Fostering Synergy between Technology, Business and Humanity.
Old Mutual Investment Group. (2025). Platinum gives South Africa fiscal boost ahead of budget. Reuters. https://www.reuters.com/world/africa/platinum-gives-south-africa-fiscal-boost-ahead-budget-says-old-mutual-2025-07-22
OnImpact. (2024). United Nations Principles for Responsible Investment Releases Three Year Strategy Plan. https://onimpact.com.au/united-nations-principles-for-responsible-investment-releases-three-year-strategy-plan/
Public Investment Corporation (PIC). (2024). Integrated annual report. https://www.pic.gov.za
Seok, J., Kim, Y., & Oh, Y. K. (2024). How ESG shapes firm value: The mediating role of customer satisfaction. Technological Forecasting and Social Change, 208, 123714e.
Signori, S., San-Jose, L., Retolaza, J. L., & Rusconi, G. (2021). Stakeholder Value Creation: Comparing ESG and Value Added in European Companies. Sustainability, 13(3), 1392.
South African Reserve Bank (SARB). (2025). Quarterly Bulletin March 2025. https://www.resbank.co.za/content/dam/sarb/publications/quarterly-bulletins/quarterly-bulletin-publications/2025/march-/01Full%20Quarterly%20Bulletin.pdf
Statistics South Africa (Stats SA). (2024). Quarterly Labour Force Quarter 4: 2024 Statistical Release P0211. https://www.statssa.gov.za/publications/P0211/P02114thQuarter2024.pdf
Sun, Y., & Zhao, Z. (2024). Responsible investment: Institutional shareholders and ESG performance. The Pacific-Basin Finance Journal, 85, 102357e.
Talan, G., Sharma, G. D., Pereira, V., & Muschert, G. W. (2024). From ESG to holistic value addition: Rethinking sustainable investment from the lens of stakeholder theory. International Review of Economics & Finance, 96, 103530e.
The Presidency of South Africa. (2022). South Africa’s Just Energy Transition Investment Plan (JET IP) 2023-2027. https://www.stateofthenation.gov.za/assets/downloads/climate/SAs_Just%20Energy%20Transition%20Investment%20Plan%20(JET%20IP)%202023-2027.pdf
UN Global Compact. (2004). Secretary-General launches ‘Principles for Responsible Investment’ backed by world’s largest investors. https://press.un.org/en/2006/sg2111.doc.htm
UN Global Compact. (2004). Who Cares Wins: Connecting Financial Markets to a Changing World. United Nations. https://documents1.worldbank.org/curated/en/280911488968799581/pdf/113237-WP-WhoCaresWins-2004.pdf
Veeravel, V., Murugesan, C. P., & Narayanamurthy, V. (2024). Does ESG disclosure really influence the firm performance? Evidence from India. The Quarterly Review of Economics and Finance, 95, 214-225.
Vera-Burau, A., Pera, L. S., & Massanes, M. B. (2025). Integration of quantitative ESG factors in a mining project: Case studies of a quarry. Journal of Cleaner Production, 501, 145304e.
Verheyden, T., Eccles, R. G., & Feiner, A. (2016). ESG for All? The Impact of ESG Screening on Return, Risk, and Diversification. Journal of Applied Corporate Finance, 28(2), 47-55.
Wang, M., Liu, L., & Liang, T. (2025). Does the ESG disclosure quality affect financial performance: Empirical evidence from Chinese energy-listed companies. Finance Research Letters, 77, 107118e.
Zhao, Z., & Xing, Z. (2024). Gold mining, corporate business management, and green growth in Asia. Resources Policy, 89, 104677e.
Zhou, G., Bahn, G., Lao, J., & Zhang, Y. (2024). COP28 targets for mobilizing private investment in fossil fuels extraction industry to cope with the climate change. Resources Policy, 97.
Zhou, H., & Liu, J. (2023). Digitalization of the economy and resource efficiency for meeting the ESG goals. Resources Policy, 86(PA).
Downloads
Published
Issue
Section
License
Copyright (c) 2026 Xolile Nkosi, Fabian Moodley, Sune Ferreira-Schenk
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
The author fully assumes the content originality and the holograph signature makes him responsible in case of trial.
