Environmental, Social, and Governance (ESG) practices influencing the performance of high-growth ventures listed on JSE Altx

Abstract

The incorporation of Environmental, Social, and Governance (ESG) practices is increasingly prioritised in global corporate strategies to enhance sustainable development and stakeholder trust. Investment decisions are progressively influenced by non-financial metrics, prompting the adoption of ESG frameworks by both major corporations and emerging firms in competitive markets like the Johannesburg Stock Exchange (JSE) Altx. However, empirical research on the performance effects of ESG in high-growth enterprises, especially in emerging markets with evolving institutional support for ESG, is scarce. Current literature predominantly examines established firms, neglecting how nascent companies navigate ESG responsibilities amidst rapid growth, thus creating a research gap regarding the impact of ESG on innovation and financial performance. This study seeks to assess the influence of ESG practices on the performance of high-growth ventures listed on the JSE Altx by analysing the separate effects of environmental, social, and governance factors. Utilising a positivist and quantitative research methodology, the study analysed secondary data from 25 high-growth firms collected between 2023 and 2024, incorporating ESG ratings, financial reports, and innovation metrics with statistical techniques including Pearson correlations and multiple linear regression via SPSS. The findings indicate that while environmental practices positively affect innovation performance, no ESG dimensions significantly impact financial or operational results, suggesting that ESG adoption among high-growth Altx firms may be more compliance-driven than strategically motivated. These results underscore the nascent nature of ESG's effectiveness as a performance enhancer in this sector, indicating an urgent need for specialised policy support, ESG reporting frameworks for SMEs, and initiatives to ensure that ESG integration yields real value for firms and society.