GRI and SRI: acronyms for investor success?

The global move towards sustainability and sustainability reporting, the rise and influence of the Global Reporting Initiative (GRI) and triple bottom line reporting, together with the launch of the King III Report, and revision of the Johannesburg Stock Exchange (JSE) listing requirements in Sout...

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Main Author: Labuschagne, Zani
Format: Others
Language:en
Published: 2014
Subjects:
Online Access:http://hdl.handle.net10539/14041
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spelling ndltd-netd.ac.za-oai-union.ndltd.org-wits-oai-wiredspace.wits.ac.za-10539-140412019-05-11T03:41:54Z GRI and SRI: acronyms for investor success? Labuschagne, Zani Corporate social responsibility Global Reporting Initiative King III report Sustainability Reporting standards Portfolios Johannesburg Stock Exchange The global move towards sustainability and sustainability reporting, the rise and influence of the Global Reporting Initiative (GRI) and triple bottom line reporting, together with the launch of the King III Report, and revision of the Johannesburg Stock Exchange (JSE) listing requirements in South Africa, both requiring the preparation of an integrated report, have resulted in a uniquely altered information environment, in which investors are required to make investment decisions. The value-relevance of this new sustainability information is however to date untested in a South African context. The introduction of the Social Responsible Investment (SRI) Index in South Africa provides a unique opportunity to evaluate the value-relevance of such new reporting. This research report tests the GRI, using the SRI Index as a proxy, to determine whether this accepted reporting standard is recognized as being valuerelevant, from both a short term and long term perspective, on the JSE over the period 2004 to 2012. The short term value-relevance is tested using cumulative average abnormal returns in an event study methodology, while the long term effect was investigated using a 4-tiered portfolio construction technique, which uses the SRI Index category rankings to define the portfolios. The results indicate that true to the long term nature of sustainability information, in the short term the quality of sustainability and sustainability reporting has no effect on the market value of a company. However, in the long term, a positive effect was found where the SRI listed portfolio, and the SRI best performer portfolio, significantly outperformed the non-listed portfolio on a consistent basis as measured using relative performance. The SRI persistent best performer portfolio however underperformed all other portfolios. This is however due to an overwhelming lack of diversification due to a low number of shares in the portfolio, as well as the portfolio being severely overweight in resource shares, which tend to be the best reporters, due to their large environmental impact. The research report therefore concludes that investing in a higher quality SRI/GRI sustainability portfolio, as opposed to a lower quality portfolio, resulted in excess returns to the investors over the period 2004-2012. 2014-03-06T07:39:25Z 2014-03-06T07:39:25Z 2014-03-06 Thesis http://hdl.handle.net10539/14041 en application/pdf
collection NDLTD
language en
format Others
sources NDLTD
topic Corporate social responsibility
Global Reporting Initiative
King III report
Sustainability
Reporting standards
Portfolios
Johannesburg Stock Exchange
spellingShingle Corporate social responsibility
Global Reporting Initiative
King III report
Sustainability
Reporting standards
Portfolios
Johannesburg Stock Exchange
Labuschagne, Zani
GRI and SRI: acronyms for investor success?
description The global move towards sustainability and sustainability reporting, the rise and influence of the Global Reporting Initiative (GRI) and triple bottom line reporting, together with the launch of the King III Report, and revision of the Johannesburg Stock Exchange (JSE) listing requirements in South Africa, both requiring the preparation of an integrated report, have resulted in a uniquely altered information environment, in which investors are required to make investment decisions. The value-relevance of this new sustainability information is however to date untested in a South African context. The introduction of the Social Responsible Investment (SRI) Index in South Africa provides a unique opportunity to evaluate the value-relevance of such new reporting. This research report tests the GRI, using the SRI Index as a proxy, to determine whether this accepted reporting standard is recognized as being valuerelevant, from both a short term and long term perspective, on the JSE over the period 2004 to 2012. The short term value-relevance is tested using cumulative average abnormal returns in an event study methodology, while the long term effect was investigated using a 4-tiered portfolio construction technique, which uses the SRI Index category rankings to define the portfolios. The results indicate that true to the long term nature of sustainability information, in the short term the quality of sustainability and sustainability reporting has no effect on the market value of a company. However, in the long term, a positive effect was found where the SRI listed portfolio, and the SRI best performer portfolio, significantly outperformed the non-listed portfolio on a consistent basis as measured using relative performance. The SRI persistent best performer portfolio however underperformed all other portfolios. This is however due to an overwhelming lack of diversification due to a low number of shares in the portfolio, as well as the portfolio being severely overweight in resource shares, which tend to be the best reporters, due to their large environmental impact. The research report therefore concludes that investing in a higher quality SRI/GRI sustainability portfolio, as opposed to a lower quality portfolio, resulted in excess returns to the investors over the period 2004-2012.
author Labuschagne, Zani
author_facet Labuschagne, Zani
author_sort Labuschagne, Zani
title GRI and SRI: acronyms for investor success?
title_short GRI and SRI: acronyms for investor success?
title_full GRI and SRI: acronyms for investor success?
title_fullStr GRI and SRI: acronyms for investor success?
title_full_unstemmed GRI and SRI: acronyms for investor success?
title_sort gri and sri: acronyms for investor success?
publishDate 2014
url http://hdl.handle.net10539/14041
work_keys_str_mv AT labuschagnezani griandsriacronymsforinvestorsuccess
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