Sustainable capital budgeting by SCOPE-1 greenhouse gas contributors in South Africa

Abstract

The main purpose of this study was to establish whether South African Scope-1 greenhouse gas companies practise sustainable capital budgeting. Furthermore, this research aimed to establish whether, and how, companies adapt capital budgeting tools to embed sustainability impacts when evaluating capital budgets. This study is a cross-sectional descriptive quantitative research about practices of sustainable capital budgeting and the adaptation of capital budgeting tools to incorporate sustainability impacts. Data were collected through an online survey via a Likert-type scale structured questionnaire. Quantitative data were analysed using summary tables, central tendencies, bar graphs, radars, Fisher s Exact Test, and Spearman s rank correlation coefficient ( ), while qualitative data were analysed using patterns and categories. The study concluded that Scope-1 companies practice sustainable capital budgeting because they prioritise sustainability and have motives related to competitive advantage as part of their approach to sustainability. Companies also deal with constraints related to sustainable capital budgeting tools, including discounted cash flows deficiencies and the difficulty in measuring sustainability impacts. A holistic model to incorporate sustainability impacts is still imperative and a PPP model has been suggested. This study contributes to the literature and to business by bridging the gap between sustainability and accounting bodies of knowledge, which are normally regarded as distinct.