Managing ESG Disclosures and Banks Performance in Nigeria and South Africa

Abstract

The study examined the level of Environmental, Social and Governance disclosures in Nigerian and South African deposit money banks as well as the impacts of ESG on the performance of the banks. The study was both longitudinal and cross sectional. Secondary data were extracted from the annual reports and financial statements of  the fourteen (14) Deposit Money Banks listed on the Nigerian Stock Exchange and  six (6) deposit money banks that fit into our study and listed on the Johannesburg Stock Exchange  for the period 2012 – 2018; using the census sampling technique. The study relied on the GRI-G4 reporting guidelines from where the index for the content analysis was generated. The data were analysed using descriptive statistics, correlation matrix, pooled regression technique and independent t-tests for the comparative analysis.The outcome of the independent t-test showed that there are significant differences in the disclosure levels of the three ESG dimensions of both samples (Nigeria and South Africa) at 1% level of significance respectively. This implies that the average level of ESG disclosures of South African banks is significantly higher than those of Nigerian commercial banks. Also, the outcome of the regression estimation showed that, in Nigeria banks, there is a significant positive relationship between ESG reporting and the performance proxy employed. However, the relationship was found not to be significant when tested using the South African sampled banks. The study recommends, among others, that management of Nigerian banks should integrate ESG reporting initiatives into their business model and strategy in order to guarantee long-term business survival.