The Impact of Corporate Sustainability Performance on Cost of Debt

Abstract

South Africa is arguably one of the major emitters experiencing high levels of air pollution. The blessing of natural ground resources come with a price as major mining activities contribute to seasonal air pollution and smog issues. The primary objective of the study is to investigate if corporate sustainability performance influences debt pricing. The study employs quantitative research and adopts a positivist perspective. Archival data were employed as extracted from companies constituted in the FTSE/JSE Responsible Investment Index selected primarily for their environmental impact. A short panel data set of 19 FTSE/JSE Responsible Investment Index companies is employed for statistical analysis. The chapter adopts first differenced econometric models. The results posit that financiers such as banks are becoming more sensitive to corporate sustainability performance. Limitation of this study manifest itself in the sampled companies that are environmentally responsible. Future, studies may expand the scope of this study to include companies that are not part of the FTSE/JSE RII.