Sustainable responsible investment and corporate financial performance in Zimbabwe

Abstract

The fundamental objective of this research was to explore the effect of Sustainable Responsible Investment on firm financial performance of corporates in Harare, Zimbabwe. Relevant literature was collected and gaps in line with the effect of Sustainable Responsible Investment on firm financial performance. An interview research instrument was generated to collect qualitative data from the firms and quantitative data was obtained from secondary data collection using the financial statements of 2018 annual reports of the top 100 companies in the Zimbabwe Stock Exchange. The SPSS data analysis technique was used to conduct descriptive tests. Conclusions were also drawn that the Environmental, Social and Corporate Governance activities lead to direct cost reductions in form of e.g. energy efficiency, waste reduction and reduced agency costs. However, these cost reductions are not enough to compensate for the initial cost of investment in the Environmental, Social and Corporate Governance activities in the short run. Nonetheless, it is possible that Environmental, Social and Corporate Governance activities can have a positive impact on financial performance in the long run, as previous literature argues that it takes several years for Environmental, Social and Corporate Governance to materialize into financial results. The study reveals that Environmental, Social and Corporate Governance opportunities exist in many areas of the market. In particular this holds true for markets and also in non- equity classes such as bonds and real estate. The orientation toward long-term responsible investing should therefore be important for all kinds of investors in order to fulfill their fiduciary duties and better align investors’ interests with the broader objectives of society. This therefore implies that the findings of the current investigation can be used to come with solution of sustainable investments responsibility financial performance.