Environmental protection and financial performance: an empirical analysis in Wales

Abstract

Purpose

This paper analyses the relationship between environmental protection and mid‐term financial performance, focusing on when and why this relationship is positive. In particular, the paper disaggregates environmental protection, differentiating between environmental management practices, environmental proactivity and environmental performance of the organization.

Design/methodology/approach

It uses a cross‐section survey of 2,122 Welsh companies to gather information on environmental practices and the FAME database to collect data on accounting based financial performance. The paper uses regression analysis on a combined sample of 186 Welsh companies to evaluate the effect on performance of different types of environmental protection.

Findings

On the whole, the results show a positive effect of environmental protection on mid‐term financial performance. Financial performance has a positive and significant correlation with environmental proactivity and with environmental performance, while it has a no significant relation with environmental management.

Originality/value

The paper presents a disaggregated analysis of environmental protection in relationship with financial performance. The paper differentiates between environmental management practices, environmental proactivity and environmental performance of the organization in their relationship with financial performance.

Citation

de Burgos‐Jiménez, J., Vázquez‐Brust, D., Plaza‐Úbeda, J.A. and Dijkshoorn, J. (2013), "Environmental protection and financial performance: an empirical analysis in Wales", International Journal of Operations & Production Management, Vol. 33 No. 8, pp. 981-1018. https://doi.org/10.1108/IJOPM-11-2010-0374