IFRS disclosures and the dynamics of climate change: Analysis of South African manufacturing companies.
DOI:
https://doi.org/10.38142/ijesss.v7i2.1472Keywords:
Climate Change, Financial Reporting, IFRS Disclosures, SustainabilityAbstract
The planet is gradually deteriorating due to climate change. Climate change is created by shifts in temperatures and weather patterns. Changes in temperatures might be natural, however, since the nineteenth century, human beings have made a significant contribution to climate change by not being environmentally conscious when burning fossil fuels, deforestation, using fertilisers and using fluorinated gases. Consequently, adding vast quantities of greenhouse gases to those naturally occurring in the atmosphere results in a rise in the greenhouse effect and global warming. Climate change affects not only human and natural systems but also the transparency of companies in making their financial disclosure during such climate conditions. The companies can be transparent by using the climate accounting tool to measure and report on the organisation's climate impact through direct and indirect emissions. Given the non-disclosures of many companies, the study explored International Financial Reporting Standard (IFRS) disclosures and the dynamics of climate change. This disclosure motivates investors by informing them about climate solutions and how the company is building its resilience against climate impacts so that they can make informed investment decisions. The data is collected from JSE-listed manufacturing companies using Refinitiv Eikon, using a historical period from 2005 to 2022. The analysis uses descriptive statistics involving dissimilar econometric techniques such as the panel data dependence technique, pooled multivariate regression, Generalised Method of Moments (GMM), feasible generalised least squares and Pooled Fixed and Random effects. The study found a cross-sectional dependence among the identified dynamics.
Downloads
References
Abdi, Y., Li, X., & Càmara-Turull, X. (2022). Exploring the impact of sustainability (ESG) disclosure on firm value and financial performance (FP) in airline industry: the moderating role of size and age. Environment, development and sustainability, 24(4), 5052-5079.
Abdulmaksoud, S., Alzaatreh, A., & Beheiry, S. (2025). Exploring stakeholders' perceptions of the Triple Bottom Line in the UAE construction sector: A structural equation modeling approach. Social Sciences & Humanities Open, 11, 101276.
Adeyemo, S., Oyebamiji, F., & Alimi, K. (2013). An evaluation of factors influencing corporate social responsibility in Nigerian manufacturing companies. International Journal of Academic Research in Economics and Management Sciences, 2(6), 54.
Adubor, N. V., Adeniji, A. A., Salau, O. P., Olajugba, O. J., & Onibudo, G. O. (2022). Exploring Green Human Resource Adoption and Corporate Sustainability in Nigerian Manufacturing Industry. Sustainability, 14(19), 12635. Available: https://www.mdpi.com/2071-1050/14/19/12635
Agrawal, R., Samadhiya, A., Banaitis, A., & Kumar, A. (2024). Entrepreneurial barriers in achieving sustainable business and cultivation of innovation: a resource-based view theory perspective. Management Decision(ahead-of-print).
Allison, P. D. (2009). Fixed effects regression models. SAGE publications.
Alodat, A. Y., Salleh, Z., Hashim, H. A., & Sulong, F. (2024). Sustainability disclosure and firms’ performance in a voluntary environment. Measuring Business Excellence, 28(1), 105-121.
Alpert, G., Black, M., & Portz, K. (2022). Steelcase Inc.’s Climate Risk Scenario Analysis: Understanding the Impact of Climate Change on Business Operations.
Ameer, F., Khan, M. R., Khan, I., Khan, N. R., & Keoy, K. H. (2024). Organizational Resilience and Green Innovation for Environmental Performance: Evidence from Manufacturing Organizations. Vision, 09722629241254955
Amran, A., Periasamy, V., & Zulkafli, A. H. (2014). Determinants of climate change disclosure by developed and emerging countries in Asia Pacific. Sustainable Development, 22(3), 188-204.
An, H., Razzaq, A., Nawaz, A., Noman, S. M., & Khan, S. A. R. (2021). Nexus between green logistic operations and triple bottom line: evidence from infrastructure-led Chinese outward foreign direct investment in Belt and Road host countries. Environmental Science and Pollution Research, 28(37), 51022-51045.
Anderson, N. (2019). IFRS Standards and climate-related disclosures. URL: https://cdn.ifrs.org/-/media/feature/news/2019/november/in-brief-climate-change-nick-anderson.pdf
Ashrafi, M., Adams, M., Walker, T. R., & Magnan, G. (2018). How corporate social responsibility can be integrated into corporate sustainability: A theoretical review of their relationships. International Journal of Sustainable Development & World Ecology, 25(8), 672-682.
Assaf, C., Benlemlih, M., El Ouadghiri, I., & Peillex, J. (2024). Does policy uncertainty affect non‐financial disclosure? Evidence from climate change‐related information. International Journal of Finance & Economics, 29(4), 4613-4629.
Attenborough, D. (2022). Corporate disclosures on climate change: an empirical analysis of ftse all-share british fossil fuel producers. European Business Organization Law Review, 23(2), 313-346.
Balugani, E., Butturi, M. A., Chevers, D., Parker, D., & Rimini, B. (2020). Empirical evaluation of the impact of resilience and sustainability on firms’ performance. Sustainability, 12(5), 1742.
Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120.
Baumgartner, R. J., & Rauter, R. (2017). Strategic perspectives of corporate sustainability management to develop a sustainable organization. Journal of Cleaner Production, 140, 81-92. Available: https://doi.org/https://doi.org/10.1016/j.jclepro.2016.04.146
Ben-Amar, W., Comyns, B., & Martinez, I. (2022). The COVID-19 pandemic: opportunity or challenge for climate change risk disclosure? Accounting, Auditing & Accountability Journal(ahead-of-print).
Berenguer-Rico, V., & Wilms, I. (2021). Heteroscedasticity testing after outlier removal. Econometric Reviews, 40(1), 51-85.
Beske, F., Haustein, E., & Lorson, P. C. (2020). Materiality analysis in sustainability and integrated reports. Sustainability Accounting, Management and Policy Journal, 11(1), 162-186.
Birkel, H., & Muller, J. M. (2021). Potentials of industry 4.0 for supply chain management within the triple bottom line of sustainability–A systematic literature review. Journal of Cleaner Production, 289, 125612.
Bopape, M.-J. M., Sebego, E., Ndarana, T., Maseko, B., Netshilema, M., Gijben, M., Landman, S., Phaduli, E., Rambuwani, G., & Van Hemert, L. (2021). Evaluating South African weather service information on idai tropical cyclone and KwaZulu-natal flood events. South African Journal of Science, 117(3-4), 1-13.
Botosan, C., Christensen, D., Durney, M. T., Gee, K. H., & Mongold, C. (2025). The role of standard setters in financial reporting. Forthcoming. Handbook on the Financial Reporting Environment (edited by W. ge, A. Koester, and S. McVay, 2025), Edward Elgar Publishing Ltd.
Breusch, T. S., & Pagan, A. R. (1980). The Lagrange multiplier test and its applications to model specification in econometrics. The review of economic studies, 47(1), 239-253.
Calabrese, A., Costa, R., Ghiron, N. L., & Menichini, T. (2017). Materiality analysis in sustainability reporting: a method for making it work in practice. European Journal of Sustainable Development, 6(3), 439-439.
Camarinha-Matos, L. M., Rocha, A. D., & Graça, P. (2024). Collaborative approaches in sustainable and resilient manufacturing. Journal of Intelligent Manufacturing, 35(2), 499-519.
CDSB. (2022). Basis for conclusions on IFRS S2 climate-related disclosures. IFRS Foundation. Available: https://www.ifrs.org/content/dam/ifrs/project/climate-related-disclosures/issb-exposure-draft-2022-2-basis-for-conclusions-climate-related-disclosures
Chen, P., Chu, Z., & Zhao, M. (2024). The Road to corporate sustainability: The importance of artificial intelligence. Technology in Society, 76, 102440. Available: https://doi.org/https://doi.org/10.1016/j.techsoc.2023.102440
Ciliberto, C., Szopik‐Depczyńska, K., Tarczyńska‐Łuniewska, M., Ruggieri, A., & Ioppolo, G. (2021). Enabling the Circular Economy transition: A sustainable lean manufacturing recipe for Industry 4.0. Business Strategy and the Environment, 30(7), 3255-3272.
DeFries, R. S., Edenhofer, O., Halliday, A. N., Heal, G. M., Lenton, T., Puma, M., Rising, J., Rockström, J., Ruane, A., & Schellnhuber, H. J. (2019). The missing economic risks in assessments of climate change impacts.
Eccles, R. G., et al. (2012). The significance of materiality. Sloan Management Review.
Elkington, J. (1997). Cannibals with forks: The triple bottom line of 21st century business. Capstone.
Engelbrecht, F., Le Roux, A., Vogel, C., & Mbiyozo, A. (2022). Is climate change to blame for KwaZulu-Natal’s flood damage? Institute for Security Studies. https://issafrica.org/iss-today/is-climate-change-to-blame-for-kwazulu-natals-flood-damage
Favot, M., Grassetti, L., Massarutto, A., & Veit, R. (2022). Regulation and competition in the extended producer responsibility models: Results in the WEEE sector in Europe. Waste Management, 145, 60-71.
Ferreira, N. C., & Ferreira, J. J. (2024). The field of resource-based view research: mapping past, present and future trends. Management Decision.
Fiume, R., Onesti, T., di Montezemolo, G. C., & Strada, M. (2022). Dialogue with standard setters. Climate change and Financial reporting. Financial reporting(2022/1).
Fuad, F., Juliarto, A., Prasetyo, A. B., & Fahlevi, A. R. (2022). Early compliance with IFRS 16, earnings management, and corruption: evidence from Southeast Asia. Cogent Business & Management, 9(1), 2141092.
Gahramanova, G., & Kutlu Furtuna, Ö. (2023). Corporate climate change disclosures and capital structure strategies: evidence from Türkiye. Journal of Capital Markets Studies, 7(2), 140-155.
Gavronski, I., Klassen, R. D., Vachon, S., & do Nascimento, L. F. M. (2011). A resource-based view of green supply management. Transportation Research Part E: Logistics and Transportation Review, 47(6), 872-885.
Grigoroi, L. (2017). Venituri din contractele cu clienții: aspect-cheie din perspectiva IFRS 15= Revenue from Contracts with Customers: Key Aspects in the Light of IFRS 15.
Haggenmuller, S. (2019). Revenue recognition under IFRS 15: A Critical Evaluation of predefined purposes and implications for improvement University of Gloucestershire].
Hameed, A. M., Al-taie, B. F. K., & Al-Mashhadani, B. N. A. (2019). The Impact of IFRS 15 on Earnings Quality in businesses such as hotels: critical evidence from the Iraqi environment. African Journal of Hospitality, Tourism and Leisure, 8(4), 1-11.
Hapsoro, D., & Falih, Z. N. (2020). The effect of firm size, profitability, and liquidity on the firm value moderated by carbon emission disclosure. Journal of Accounting and Investment, 21(2), 240-257.
Hardiyansah, M., Agustini, A. T., & Purnamawati, I. (2021). The effect of carbon emission disclosure on firm value: environmental performance and industrial type. The Journal of Asian Finance, Economics and Business, 8(1), 123-133.
Hladika, M., & Valenta, I. (2018). Analysis of the effects of applying the new IFRS 16 Leases on the financial statements. Economic and Social Development: Book of Proceedings, 1(1), 255-263.
Holling, C. S. (1973). Resilience and stability of ecological systems. Annual Review of Ecology and Systematics, 4, 1–23.
Horton, J., Serafeim, G., & Serafeim, I. (2013). Does mandatory IFRS adoption improve the information environment? Contemporary accounting research, 30(1), 388-423.
Hsu, C. W., Lee, W. H., & Chao, W. C. (2013). Materiality analysis model in sustainability reporting: A case study at Lite-On Technology Corporation. Journal of Cleaner Production, 57, 142-151.
Iatridis, G., & Rouvolis, S. (2010). The post-adoption effects of the implementation of International Financial Reporting Standards in Greece. Journal of international accounting, auditing and taxation, 19(1), 55-65.
Ivanov, D. (2023). The Industry 5.0 framework: viability-based integration of the resilience, sustainability, and human-centricity perspectives. International Journal of Production Research, 61(5), 1683-1695.
Joltreau, E. (2022). Extended producer responsibility, packaging waste reduction and eco-design. Environmental and Resource Economics, 83(3), 527-578.
Khan, I. S., Ahmad, M. O., & Majava, J. (2021). Industry 4.0 and sustainable development: A systematic mapping of triple bottom line, Circular Economy and Sustainable Business Models perspectives. Journal of Cleaner Production, 297, 126655. Available: https://doi.org/https://doi.org/10.1016/j.jclepro.2021.126655
Khan, M., Ajmal, M. M., Jabeen, F., Talwar, S., & Dhir, A. (2023). Green supply chain management in manufacturing firms: A resource‐based viewpoint. Business Strategy and the Environment, 32(4), 1603-1618.
Khanzode, A. G., Sarma, P., Mangla, S. K., & Yuan, H. (2021). Modeling the Industry 4.0 adoption for sustainable production in Micro, Small & Medium Enterprises. Journal of Cleaner Production, 279, 123489.
KPMG. (2022). Ten questions to start your climate risk assessment. In KPMG (Ed.), How might climate-related risks impact your financial statements. KPMG Australia. Available: https://assets.kpmg/content/dam/kpmg/au/pdf/2022/climate-change-risks-financial-statements-10-questions.pdf
Kutlu Furtuna, O., & Sonmez, H. (2024). Critical masses and voluntary climate change disclosures: evidence from Türkiye. Social Responsibility Journal, 20(5), 956-974.
Leclerc, S. H., & Badami, M. G. (2024). Extended producer responsibility: An empirical investigation into municipalities' contributions to and perspectives on e‐waste management. Environmental Policy and Governance, 34(2), 111-124.
Lee, K. L., Wong, S. Y., Alzoubi, H. M., Al Kurdi, B., Alshurideh, M. T., & El Khatib, M. (2023). Adopting smart supply chain and smart technologies to improve operational performance in manufacturing industry. International Journal of Engineering Business Management, 15, 18479790231200614. Available: https://doi.org/10.1177/18479790231200614
Letsatsi, N., & Kruger, A. (2022). The april 2022 floods in comparison with other recent flooding events in kwazulu-natal. Weathersmart, 5.
Lindhqvist, T. (1990). Towards an Extended Producer Responsibility. Lund University.
Liu, Z., Wan, M.-D., Zheng, X.-X., & Koh, S. L. (2022). Fairness concerns and extended producer responsibility transmission in a circular supply chain. Industrial Marketing Management, 102, 216-228.
Maitre-Ekern, E. (2021). Re-thinking producer responsibility for a sustainable circular economy from extended producer responsibility to pre-market producer responsibility. Journal of Cleaner Production, 286, 125454.
Matos, A. I. A. (2021). Effects of the IFRS 16 adoption in the value relevance of accounting information for the European listed companies.
Megeid, N. S. A. (2024). The impact of climate risk disclosure on financial performance, financial reporting and risk management: evidence from Egypt. Future Business Journal, 10(1), 21.
Mio, C., Fasan, M., & Costantini, A. (2020). Materiality in integrated and sustainability reporting: a paradigm shift? Business Strategy and the Environment, 29(1), 306-320.
Moldavska, A., & Welo, T. (2019). A Holistic approach to corporate sustainability assessment: Incorporating sustainable development goals into sustainable manufacturing performance evaluation. Journal of Manufacturing Systems, 50, 53-68. Available: https://doi.org/https://doi.org/10.1016/j.jmsy.2018.11.004
Morales Díaz, J., & Zamora Ramírez, C. (2018). IFRS 16 (leases) implementation: Impact of entities’ decisions on financial statements. Aestimatio: The IEB International Journal of Finance, 17, 60-97.
Nasih, M., Harymawan, I., Paramitasari, Y. I., & Handayani, A. (2019). Carbon emissions, firm size, and corporate governance structure: Evidence from the mining and agricultural industries in Indonesia. Sustainability, 11(9), 2483.
Negri, M., Cagno, E., Colicchia, C., & Sarkis, J. (2021). Integrating sustainability and resilience in the supply chain: A systematic literature review and a research agenda. Business Strategy and the Environment, 30(7), 2858-2886.
Ngu, S.-B., & Amran, A. (2024). Unveiling the antecedents and the outcome of materiality disclosure: insights from sustainability reporting of Malaysian public listed companies. Meditari Accountancy Research, 32(6), 2053-2082.
Nguyen, L. T., & Thanh, C. L. (2022). The influence of board characteristics on environmental performance: evidence from East Asian manufacturing industries. International Journal of Emerging Markets, 17(10), 2702-2720.
Okorie, O., Russell, J., Cherrington, R., Fisher, O., & Charnley, F. (2023). Digital transformation and the circular economy: Creating a competitive advantage from the transition towards Net Zero Manufacturing. Resources, Conservation and Recycling, 189, 106756. Available: https://doi.org/https://doi.org/10.1016/j.resconrec.2022.106756
Oll, J., Spandel, T., Schiemann, F., & Akkermann, J. (2025). The concept of materiality in sustainability reporting: from essential contestation to research opportunities. Sustainability Accounting, Management and Policy Journal, 16(2), 321-350.
Pandiangan, S. M. T., Oktafiana, F., Panjaitan, S. R., & Shifa, M. (2022). Analysis of public ownership and management ownership on the implementation of the triple bottom line in the plantation sector listed on the Indonesia Stock Exchange. Budapest International Research and Critics Institute-Journal (BIRCI-Journal), 5(1), 349-3497.
Pedroni, P. (2004). Panel cointegration: asymptotic and finite sample properties of pooled time series tests with an application to the PPP hypothesis. Econometric theory, 20(3), 597-625.
Rajesh, R. (2021). Optimal trade-offs in decision-making for sustainability and resilience in manufacturing supply chains. Journal of Cleaner Production, 313, 127596.
Rotimi, M. E., & Ngalawa, H. (2017). Oil price shocks and economic performance in Africa’s oil exporting countries. Acta Universitatis Danubius. Œconomica, 13(5), 169-188.
Saha, A. K., & Khan, I. (2024). Regulatory influence, board characteristics and climate change disclosures: evidence from environmentally sensitive firms in developing economy context. Corporate Governance: The International Journal of Business in Society.
Samadhiya, A., & Agrawal, R. (2024). Total productive maintenance and sustainability performance: resource-based view perspective. Benchmarking: An International Journal, 31(7), 2177-2196.
Saraswati, E., Amalia, R. S., & Herawati, T. (2021). Determinants of carbon emission disclosure in Indonesia manufacturing company. Asian Journal of Economics, Business and Accounting, 21(3), 1-9.
Saud, S., Chen, S., Haseeb, A., & Sumayya, G. (2020). The role of financial development and globalization in the environment: Accounting ecological footprint indicators for selected one-belt-one-road initiative countries. Journal of Cleaner Production, 250, 119518. Available: https://doi.org/https://doi.org/10.1016/j.jclepro.2019.119518
Savino, M. M., & Shafiq, M. (2018). An extensive study to assess the sustainability drivers of production performances using a resource-based view and contingency analysis. Journal of Cleaner Production, 204, 744-752.
Schurer, S., & Yong, J. (2012). Personality, well-being and the marginal utility of income: What can we learn from random coefficient models?
Shibin, K., Dubey, R., Gunasekaran, A., Hazen, B., Roubaud, D., Gupta, S., & Foropon, C. (2020). Examining sustainable supply chain management of SMEs using resource-based view and institutional theory. Annals of Operations Research, 290, 301-326.
Shooshtarian, S., Maqsood, T., Wong, P. S., Khalfan, M., & Yang, R. J. (2021). Extended producer responsibility in the Australian construction industry. Sustainability, 13(2), 620.
Smith, C. (2022). Flood damaged Toyota plant. News24. Available: https://www.news24.com/fin24/companies/flood-damaged-durban-toyota-plant-could-be-fully-operational-by-end-of-september-20220729
Souza, A. A. A., Alves, M. F. R., Macini, N., Cezarino, L. O., & Liboni, L. B. (2017). Resilience for sustainability as an eco-capability. International Journal of Climate Change Strategies and Management, 9(5), 581-599.
Tang, S. (2022). Why do companies not disclose climate change adaptation strategies?
Thapa, K., Vermeulen, W. J., Deutz, P., & Olayide, O. (2023). Ultimate producer responsibility for e‐waste management–A proposal for just transition in the circular economy based on the case of used European electronic equipment exported to Nigeria. Business Strategy & Development, 6(1), 33-52.
Thomas, A., Byard, P., Francis, M., Fisher, R., & White, G. R. (2016). Profiling the resiliency and sustainability of UK manufacturing companies. Journal of Manufacturing Technology Management, 27(1), 82-99.
Tong, T. L. (2014). A review of IFRS 15 Revenue from contracts with customers. Çevrimiçi) http://www. masb. org/my/images/2014-09-15% 20Review% 20of%-20IFRS
Toth, A., Suta, A., & Szauter, F. (2022). Interrelation between the climate-related sustainability and the financial reporting disclosures of the European automotive industry. Clean Technologies and Environmental Policy, 24(1), 437-445.
Usurelu, V. I., & Dutescu, A. (2018). IFRS 15–the seventh wave of Norwalk Agreement’s convergence Roadmap. Proceedings of the International Conference on Business Excellence,
Wasim, R. (2019). Corporate (non) disclosure of climate change information. Columbia Law Review, 119(5), 1311-1354.
Wernerfelt, B. (1984). A resource-based view of the firm. Strategic Management Journal, 5(2), 171–180
Widianto, I., & Sari, D. P. (2020). The effect of environmental performance, leverage and company size towards carbon emission disclosure on rated proper company in 2015–2018. The effect of environmental performance, leverage and company size towards carbon emission disclosure on rated proper company in 2015–2018, 1(02), 97-118.
Yadav, G., Luthra, S., Huisingh, D., Mangla, S. K., Narkhede, B. E., & Liu, Y. (2020). Development of a lean manufacturing framework to enhance its adoption within manufacturing companies in developing economies. Journal of Cleaner Production, 245, 118726. Available: https://doi.org/https://doi.org/10.1016/j.jclepro.2019.118726
Yoo, J. M., Shin, H., Chung, D. Y., & Sung, Y. E. (2022). Carbon shell on active nanocatalyst for stable electrocatalysis. Accounts of Chemical Research, 55(9), 1278-1289.
Zhao, Y., Peng, B., Elahi, E., & Wan, A. (2021). Does the extended producer responsibility system promote the green technological innovation of enterprises? An empirical study based on the difference-in-differences model. Journal of Cleaner Production, 319, 128631.
Zhu, N., Osei, A., & Agyemang, A. O. (2024). Do board attributes influence environmental sustainability disclosure in manufacturing firms? Evidence from sub‐Saharan Africa. Corporate Social Responsibility and Environmental Management, 31(5), 4759-4771.
Downloads
Published
Issue
Section
License
Copyright (c) 2026 Mzwandile Mzwandile, Mishelle Doorasamy, Odunayo Magret Olarewaju
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
Creative Commons Attribution-NonCommercial 4.0 International License.
