Sustainability Reputation and Environmental Performance or “The Proof of the Pudding is in the Eating”

Abstract

The premise for this research is quite simple: Is what one sees/hears a reasonably accurate reflection of reality? When it comes to the reputation companies have with regard to sustainable development, we propose that, as Cervantes had Don Quixote say, “the proof of the pudding is in the eating.”

This study is about the actual relationship between company environmental performance – in this case, relative amounts of toxic chemical releases – and third-party judgments regarding company reputation for sustainability. Our particular concern is this: Are companies that are touted as high achievers regarding sustainable development the best relative performers in their industry with respect to guarding the environment?

We studied 52 Fortune 500 companies with U.S. operations that were cited in at least one of three major international reputational listings as being high achievers for sustainable development. Matched to these highly reputable firms – based on industrial classification and size – were a similar number of firms that had not been given a “good reputation” recognition.

We find no significant difference between the firms that are reported to be engaged in best practices with respect to sustainable development and those that have no such public recognition. The 52 sample companies and their matches from the Fortune 500 population are indistinguishable with respect to environmental performance. As performance does not differ, we are led to the conclusion that perception and reality do.

Citation

Freedman, M. and Stagliano, A.J. (2010), "Sustainability Reputation and Environmental Performance or “The Proof of the Pudding is in the Eating”", Lehman, C.R. (Ed.) Ethics, Equity, and Regulation (Advances in Public Interest Accounting, Vol. 15), Emerald Group Publishing Limited, Leeds, pp. 61-74. https://doi.org/10.1108/S1041-7060(2010)0000015006