Does the market assign a premium to environmental resource efficiency? The synergistic impact of water and energy performance on firm value in an emerging economy

As climate change continues to progress, corporate sustainability transitions are increasingly relevant, though their financial viability within capital-constrained emerging markets remains a subject of ongoing debate. Anchored in the Natural-Resource-Based View (NRBV), this study investigates whether financial markets assign valuation premiums to corporate environmental resource efficiencies, specifically examining the combined effects of water and energy management on overall company value. Using panel data from 66 socially responsible companies listed on the Johannesburg Stock Exchange from 2013 to 2021, the study employs a dynamic two-step system generalized method of moments, complemented by omitted variable, propensity score matching, Lind-Mehlum non-linear, and Dumitrescu-Hurlin causality robustness checks. The findings suggest that isolated water conservation is associated with marginal benefits (short-run β = 0.0438, long-run β = 0.0521; p < 0.10), while standalone energy transitions show a persistent negative relationship with market valuation (short-run β = −0.2125, long-run β = −0.2530; p < 0.01). These results indicate that the market may associate isolated environmental expenditures with linear sunk costs rather than value-adding investments. However, the concurrent integration of water and energy strategies is associated with a statistically significant, positive impact on firm valuation (short-run β = 0.4498, long-run β = 0.5355; p < 0.01). Furthermore, causality evaluations map a bidirectional sustainability feedback loop, suggesting that integrated resource management is positively associated with market valuation, which subsequently could help finance further integrated operations. Consequently, it is suggested that corporate executives consider transitioning from fragmented compliance toward integrated environmental management systems to unlock sustained competitive advantage. Furthermore, policymakers might explore structuring fiscal incentives for holistic resource strategies rather than isolated environmental targets, which may help align corporate sustainability with the Sustainable Development Goals (SDGs) and economic growth.