Beyond the green facade: unravelling the nexus between sustainable business practices and firms financial performance for Botswana’s economic growth

Abstract

This study investigates the adoption and impact of sustainable business practices (SBPs) on firm performance among selected listed companies in Botswana during 2022 and 2023. Grounded in legitimacy and agency theories, the research employs quantitative content analysis and pooled OLS regression models on annual integrated reports. Findings indicate social SBPs were the most prevalent, comprising 52% of disclosures in 2023 and 51% in 2022, reflecting a growing emphasis on sustainability. Governance practices accounted for 30%, while environmental practices were least reported at 18%. A positive relationship was identified between environmental, social, and governance (ESG) initiatives, a measure of SBPs and return on equity (ROE), suggesting that robust ESG practices enhance firm performance. The significant influence of social SBPs on ROE underscores the importance of strong community and employee engagement in achieving better performance through enhanced goodwill and reputation. This reflects a strategic shift towards stakeholder engagement beyond traditional profit goals. This study fills a crucial gap in understanding the impact of ESG practices in Botswana. It advocates for broader adoption of SBPs to promote sustainable economic growth and societal benefits. The findings suggest that increased transparency in reporting enhances firm profitability, thus contributing to Botswana’s overall economic development.