Corporate Ownership & Control / Volume 12, Issue 2, Winter 2015 128 CORPORATE GOVERNANCE IN SOUTH AFRICA SECTION 3 INVESTIGATING THE IMPACT OF CARBON TAX ON SOCIALLY RESPONSIBLE CORPORATE GOVERNANCE: THE CASE OF SOUTH AFRICAN MOTOR VEHICLE MANUFACTURERS Suren Pillay*, Pieter Buys** Abstract Socially responsible corporate governance is an essential aspect of the contemporary corporate environment, and then especially in ensuring continuous sustainable development within a South African context. As such, it also encompasses broad environmentally focused aspects. The motor vehicle manufacturing industry in South Africa was among the first to be faced with the implementation of carbon taxes. This paper explores the policy decision to implement the carbon tax within the context of socially responsible governance in the motor vehicle manufacturing industry. The research methodology applied incorporates both review of supporting literature and an exploratory empirical case study. The research suggests that the industry is cognizant of the importance of environmental damage costs and their responsibility therein, while also indicating that corporate social investment in this industry was non-responsive to the implementation to carbon tax. The results also suggest that the current carbon tax rate may be adequately priced and is an effective instrument in lowering greenhouse gas emissions. Keywords: Carbon Tax, Corporate Social Investment, Corporate Social Responsibility, Governance, Sustainable Development, Sustainability Reporting JEL Code: M14, M21, M40, Q56 *School of Accounting, Economics and Finance,University of KwaZulu Natal, South Africa **NWU Business School, Potchefstroom Campus, South Africa Tel: + 27 (018) 299 1435 1 Introduction 1.1 Background When developing corporate strategies, a sound understanding of the ever-evolving business environment is imperative. So much so, that Buys (2012a) is of the opinion that an organization that fails to account for a dynamic business environment would lose its market relevance, its customers and ultimately the support of its stakeholders. In order to achieve a corporate goal of long-term sustainability, an organization should therefore ensure cognizance of all stakeholders’ expectations by harmonizing economic prosperity, environmental quality and social wellbeing. The organization should therefore not only be financially secure, but also curtail undesirable environmental impacts and act in conformity with society’s expectations. In terms of undesirable environmental impacts, the Fourth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC) confirmed that the average global temperature has increased by 0.741°C during the period 1906 to 2005, causing sea levels to rise due to melting snow and ice (Li et al., 2012). Adding to the phenomenon, greenhouse gas emissions are also expected to rise in the next three decades, potentially contributing to