Assessing the business case of adopting green strategies in the South African mining industry
Date
2014-10-10
Authors
Fortugno, Carlo
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Abstract
Environmental legislation, in South Africa and worldwide, has had a profound impact on the mining sector. This study evaluates the green business strategies adopted by mining companies in the South African market. In particular, the intent is to evaluate the direct competitive advantage and degree of future competitive positioning adopted green strategies offer the mining groups in South Africa. A combination of in-depth literature review and semi-structured interviews provided insight from mining organisations.
Since the early 1990s, researchers have investigated why certain firms prioritise ecological issues; why companies go green has always been the question. Looking to the answer, there is a series of motivating factors behind mining companies going green: legal compliance and stakeholders’ pressure, ethics, strategic initiatives, and competitive advantage. Ultimately, the relationship between adoption of green strategies and competitive advantage can be summarised as follows: increased productivity, increased share price value, cost reduction, higher barriers to entry, increased cashflow, reduced debt exposure, increased profit, and free advertising.
With the main worldwide approaches to green strategies defined, the findings support the theory that South African mines adopt various green strategies for different reasons, with different motivations. The multinational ones that proactively go green to gain a competitive advantage manage to achieve, in the short-, medium- and long-term, the aforementioned results. Local mining groups, on the other hand, still perceive “going green” as an extra cost to their operation and are merely adopting a reactive approach to current environmental legislation.
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Mineral industries -- Environmental aspects -- South Africa