The impact of environmental costs on financial performance: An explorative analysis of two plastic companies

  • Received August 8, 2022;
    Accepted January 17, 2023;
    Published March 7, 2023
  • Author(s)
  • DOI
    http://dx.doi.org/10.21511/ee.14(1).2023.02
  • Article Info
    Volume 14 2023, Issue #1, pp. 13-23
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There is little research on the impact of environmental costs on plastic manufacturing companies’ financial performance and sustainability. This paper aims to explore the relationship between environmental costs and financial performance of two large national plastic manufacturing companies, namely Bowler Metcalf Limited (BML) and Nampak Ltd, between 2018 and 2019 since research allows for five year old information. Further, the study used pre-Covid-19 data to conceptualize. It adopted a qualitative method of inquiry using content analysis to analyze the financial statements and reports of the two companies (secondary data analysis) available in the public domain. The interpretative analysis further supported the analysis and interpretation of the two variables of environmental costs and financial performance. The results showed a positive relationship between environmental costs and profits in the financial statements of these two companies during 2018 and 2019. BML had a decrease in plastic penalties from R 23.171 million in 2018 to R 14.596 million in 2019, which supported a reduction in spending on legal and constructive obligation items. Nampak also decreased stakeholders’ equity from R 10,140.3 million in 2018 to R 8,932.33 million in 2019, which meant that the stakeholders’ equity funds were reduced, possibly due to reduced spending on environmental costs during that period. It can be concluded and established that when these two plastic companies spend more on environmental costs, this positively affects overall financial performance and improves financial sustainability. It is recommended to allocate more resources/funding to support environmental costs to increase the profitability of the two plastic manufacturing companies.

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    • Table 1. Abstract of the two plastic companies’ revenue, profits, and shareholder’s equity in the financial statements for 2018–2019 (In millions of the reported Rand currency)
    • Table 2. Abstract of the two plastic companies’ environmental costs in the financial statements for 2018–2019 (In millions of the reported Rand currency)
    • Conceptualization
      Kansilembo Freddy Aliamutu, Anrusha Bhana, Sachin Suknunan
    • Data curation
      Kansilembo Freddy Aliamutu
    • Formal Analysis
      Kansilembo Freddy Aliamutu
    • Investigation
      Kansilembo Freddy Aliamutu, Anrusha Bhana
    • Methodology
      Kansilembo Freddy Aliamutu, Anrusha Bhana, Sachin Suknunan
    • Project administration
      Kansilembo Freddy Aliamutu, Anrusha Bhana
    • Resources
      Kansilembo Freddy Aliamutu, Anrusha Bhana
    • Validation
      Kansilembo Freddy Aliamutu, Anrusha Bhana, Sachin Suknunan
    • Visualization
      Kansilembo Freddy Aliamutu
    • Writing – original draft
      Kansilembo Freddy Aliamutu
    • Software
      Anrusha Bhana
    • Supervision
      Anrusha Bhana
    • Writing – review & editing
      Anrusha Bhana, Sachin Suknunan