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1 – 10 of over 1000The purpose of this study is to attempt to empirically examine the impact of disaggregate, eco-efficiency-based measures of corporate environmental performance (CEP) on corporate…
Abstract
Purpose
The purpose of this study is to attempt to empirically examine the impact of disaggregate, eco-efficiency-based measures of corporate environmental performance (CEP) on corporate financial performance (CFP) of Indian companies. Further, recent theories contending a bidirectional causality between them is also explored.
Design/methodology/approach
Secondary data of 224 Indian S&P 500 companies from 2002 to 2011 are used to run panel data regression models for examining the impact of CEP measures on accounting-based CFP measures.
Findings
The empirical results are statistically significant and provide evidence for a positive association of eco-efficiency-based CEP metrics on CFP metrics, thereby supporting Porter's win–win hypothesis. Further, the results evidence a positive bi-directional causality between CEP and CFP for one period time lag signalling possibility of mutual reinforcement in CEP–CFP relationship.
Research limitations/implications
The study has used data for the period 2002–2011 and eco-efficiency metrics – energy, water and material efficiencies due to availability.
Practical implications
The results have implications to both corporate managers as well as policymakers across all industries for emphasizing on eco-efficiency-based (proactive) environmental sustainability initiatives to enhance both financial and environmental bottom lines.
Originality/value
The study contributes to scarce empirical literature analysing the impact of CEP on financial performance. To the best of authors's knowledge, event studies, portfolio studies and perceptual data-based empirical studies exist in India. This study is unique in that it examines long run effect of eco-efficiency-based CEP metrics which is pertinent in a rapidly growing emerging market – India, where, eco-efficiency is considered quintessential for sustainable development.
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Hanene Kheireddine, Isabelle Lacombe and Anis Jarboui
This study elucidates the interactive relationship of sustainability assurance (SA) quality with corporate environmental sustainability performance (CESP) and firm value and…
Abstract
Purpose
This study elucidates the interactive relationship of sustainability assurance (SA) quality with corporate environmental sustainability performance (CESP) and firm value and explores the moderating impact of CESP on the SA quality–firm value relationship.
Design/methodology/approach
The sample comprises 320 firm-year observations of 40 companies listed on the Cotation Assistée en Continu (CAC 40) from 2010 to 2019. The authors use the simultaneous equations model to capture the CESP and SA quality–firm value relationship and apply the three-stage regression and generalised method of moments approaches to address possible endogeneity.
Findings
The results show that CESP, as assessed by International Organisation for Standardisation (ISO) 14001 certification, has a significant positive effect on firm value, the relevance of which implies that in the case of good environmental performance, society's perception of a firm is much more favourable; consequently, the firm is likely to be rewarded with a premium value in capital markets. In addition, environmental performance has a stronger interaction with SA quality, acting as a moderator variable; thus, greater SA quality signals credibility owing to increased eco-efficiency. The authors interpret their findings within a multi-theoretical framework that draws insights from legitimacy, stakeholders and signalling theoretical perspectives.
Originality/value
This study contributes to the literature by re-examining the relationship between SA quality and firm value. It also provides new evidence of the moderating effect of CESP on the SA quality–firm value nexus. Specifically, this study explores the joint effects of credibility and eco-efficiency on market confidence in sustainability information. The authors use a simultaneous equation model to capture the reciprocal association between SA quality and firm value, whereas prior studies on SA quality and market performance have frequently used single-equation regression. The authors also find that CESP positively moderates the relationship between SA quality and firm value. Including CESP and exploring the moderating impact of eco-efficiency on the SA quality–firm value relationship is a novel approach.
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Hanen Khaireddine, Isabelle Lacombe and Anis Jarboui
Although the association between sustainability assurance (SA) quality and firm value has been examined in previous studies, the moderating relationship is novel in this study and…
Abstract
Purpose
Although the association between sustainability assurance (SA) quality and firm value has been examined in previous studies, the moderating relationship is novel in this study and highlights the effect of corporate environmental sustainability performance (CESP) on the relationship between SA quality and firm value. This study aims to examine whether such an effect is strengthened or weakened by eco-efficiency, as measured by ISO 14001 certification, aggregate CESP score and each individual dimension of CESP (emission reduction [ER], resource reduction [RR] and product innovation [PI]).
Design/methodology/approach
The sample includes 40 companies in Euronext Paris with the largest market capitalisations (the Cotation Assistée en Continu 40 [CAC 40] index) from 2010 to 2020. The authors apply the feasible generalised least squares regression technique to estimate all the regression models. Because observed associations may be biased by reverse causation or self-selection, the authors use the instrumental variable approach and Heckman two-stage estimation.
Findings
The results show that SA quality had a positive and significant effect on firm value. Second, the authors demonstrate that CESP, as assessed by ISO 14001 certification, has a stronger interaction with assurance quality and acting as a moderator variable. Using the ASSET4 scores, an alternative proxy for CESP, the authors find inconsistent evidence regarding the impact of CESP attributes. The CESP and ER scores are homogeneous and have a positive effect on firm value. However, the PI and RR CESP attributes are not homogenous and do not have the same interactive effect on firm value. The results are robust to the use of an instrumental variable approach and the Heckman two-stage estimation procedure.
Research limitations/implications
Policy implications: Regulators may be interested in the findings when considering current and future assurance requirements for sustainability reporting, and shareholders when considering SA as an investment choice criterion. The insights into and enhanced understanding of the incentives for obtaining high SA quality can help policymakers develop effective policies and initiatives for SA. Considering the possible improvements in sustainability performance when obtaining a high level of sustainability verification, governments need to consider mandating SA.
Practical implications
Firms receive clear confirmation of the importance of investing in SA quality. Financial markets do not evaluate SA dichotomously but reward companies with higher SA quality because of the greater credibility it provides. Firms should allocate a significant percentage of their annual budgets and other relevant resources to environmental training and development programmes to improve and maintain environmental performance. If they care about environmental issues, they must announce this by issuing sustainability reports and seeking assurance of the information disclosed. High-quality assurance not only has a significant effect on investors’ investment reliability judgements but also the perceived credibility of environmental performance fully moderates the effect of assurance on these judgements.
Social implications
This study has social implications; the authors find that the French market rewards firms that provide a high-quality assurance to guarantee the integrity of their sustainability reports. Therefore, by incorporating environmental sustainability into their financial goals, a better assurance ultimately will urge firms to move from green washing to strategic goals, which is beneficial for society. Further, firms that focus on sustainability as part of their business strategy may attract employees who engage in green behaviours at work and create a friendlier and productive environment because it gives meaning to the work they do and keeps them engaged to the level needed to perform their jobs capably.
Originality/value
This study contributes to the literature by re-examining the relationship between SA quality and firm value. It also provides new evidence on the moderating effect of CESP on the SA quality–firm value nexus. Specifically, it explores the joint effect of credibility and eco-efficiency on market confidence in sustainability information.
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Roger Burritt and Stefan Schaltegger
Any measure of eco‐efficiency requires financial information, for calculating the numerator, and physical information about the environment, for calculating the denominator…
Abstract
Any measure of eco‐efficiency requires financial information, for calculating the numerator, and physical information about the environment, for calculating the denominator. Accounting and finance staff provide key financial information about the numerator in eco‐efficiency calculations. Hence, for eco‐efficiency measures to be calculated and for the measures to add value it is essential for them to be integrated with accounting and financial management processes such as budgetary control. Calculating measures of eco‐efficiency is not enough on its own to ensure corporate value is added. Accounting and finance staff have to be involved in the planning of future long‐term eco‐efficiency improvement. If value added from continuous improvement in eco‐efficiency activities is to be anticipated it is necessary for eco‐efficiency and budgeting to be integrated. The paper provides some conceptual and practical guidance to help managers achieve this integration. Recently a number of companies have suggested that corporate budgeting no longer serves a purpose in their organizations (e.g. in network organizations). By demonstrating that, if information related to the neglect of potential environmental protection activities is ignored, the costs to business can be very high, this suggested change in practice is considered. It is concluded that a set of contingent guidelines need to be developed for budgeted eco‐efficiency situations to help management and regulators assess value‐added opportunities from using this new environmental management tool.
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Keun-Hyo Yook, Hakjoon Song, Dennis M. Patten and Il-Woon Kim
This paper aims to examine whether the amount of costs disclosed as relating to environmental controls is associated with environmental performance in terms of carbon-based…
Abstract
Purpose
This paper aims to examine whether the amount of costs disclosed as relating to environmental controls is associated with environmental performance in terms of carbon-based eco-efficiency, and whether any relation supports voluntary disclosure theory or legitimacy theory arguments. Further, this paper attempts to determine whether the relations differ across the initial Kyoto Protocol period.
Design/methodology/approach
In this study, the focus was on Japanese firms over the period from 2002 to 2012. Disclosed environmental control costs (capital expenditures and operating costs) were identified and eco-efficiency measures based on carbon emissions were calculated. Relations were tested for using regression models controlling for other potential impact factors.
Findings
This study’s results indicate a negative relation between disclosed levels of environmental control costs and eco-efficiency performance measures, and, for two of our three eco-efficiency metrics, this is more pronounced over the Kyoto Protocol period.
Research limitations/implications
These results support a legitimacy theory (as opposed to voluntary disclosure theory) explanation for the relation between the levels of disclosed environmental control costs and carbon-based eco-efficiency.
Originality/value
This study is the first to explore how flexibility in cost classification may be used by companies to foster a disclosure strategy.
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Nosakhare Peter Osazuwa and Ayoib Che-Ahmad
The purpose of this study is to examine the impact of profitability and leverage on the relationship between eco-efficiency and firm value.
Abstract
Purpose
The purpose of this study is to examine the impact of profitability and leverage on the relationship between eco-efficiency and firm value.
Design/methodology/approach
The study extends the Ohlson’s model on value relevance using the hierarchical regression analysis to establish the moderating effects of the firm-specific variables. The sample includes 667 non-financial firms from the Bursa Malaysia, as of 2013. The data for eco-efficiency were extracted from content analysis of the annual report, whereas the financial data were retrieved from the data stream.
Findings
The study provides support for the stakeholder theory that purports that managers must develop a relationship with stakeholders by embarking on environmental friendly practices to maintain a positive firm value. The study shows a positive association between eco-efficiency and the value of the firm and provides support for a positive moderating relationship for profitability in the relationship between eco-efficiency and firm value, whereas there was no significant effect for leverage in the relationship.
Research limitations/implications
It should be noted that, first, the data comprised exclusively Malaysian companies. Including firms from similar developing countries with varying institutional make-up and culture would enhance the understanding of the subject. Second, considering that the data for this study is cross-sectional, it may not be sufficient to draw strong causal influences. The study is the first to the best of the researcher’s knowledge to provide evidence that profitability positively moderates the relationship between eco-efficiency and firm value.
Practical implications
The result shows the management and potential investors that an investment in eco-efficiency will lead to a higher firm value, irrespective of the debt profile of the firm and that profitable firms are more likely to embark on an eco-efficient policy.
Originality/value
This study contributes to the literature by providing evidence from a developing country’s perspective, as well as extending prior studies that merely examined the direct relationship, to now explore the moderating relationship of profitability and leverage in the relationship between eco-efficiency and firm value using a large sample.
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Silvana de Souza Moraes, Charbel Jose Chiappetta Jabbour, Rosane A.G. Battistelle, Jonny Mateus Rodrigues, Douglas S.W. Renwick, Cyril Foropon and David Roubaud
Drawing on the ability–motivation–opportunity theory applied to the greening of service industries, this paper aims to analyze the extent to which green human resource management…
Abstract
Purpose
Drawing on the ability–motivation–opportunity theory applied to the greening of service industries, this paper aims to analyze the extent to which green human resource management plays a role in the adoption of eco-efficiency principles in the financial sector. Environmental knowledge management represents one of the key green human resource management components.
Design/methodology/approach
This study conducted a survey with 178 employees working within one of the largest financial banks in Brazil, which has been investing in eco-efficiency for more than ten years.
Findings
On the basis of structural equation modelling, this study has provided the following findings: Among all factors taken into consideration in this study, only environmental training positively influences eco-efficiency; training may be suffering owing to barriers associated with empowerment and teamwork; the eco-efficiency program of the studied company would get benefits if it provided more autonomy to employees; and finally, the eco-efficiency program of the studied bank could be more effective if connected with green teams.
Originality/value
To date, this is the first work that relates – with empirical evidence from Brazil – GHRM and eco-efficiency in the financial service industry.
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Silvia Rossi, Claudia Colicchia, Alessandra Cozzolino and Martin Christopher
Sustainability and the search for solutions that are both efficient and ecologically sound (eco-efficient) have become topics of great interest. However, companies seeking to…
Abstract
Purpose
Sustainability and the search for solutions that are both efficient and ecologically sound (eco-efficient) have become topics of great interest. However, companies seeking to develop supply chain solutions that are eco-efficient are often hampered by their ability to control the wider supply chain and they may need to draw on external support from logistics service providers (LSPs). This paper aims to explore the innovative strategies undertaken by LSPs in the eco-efficiency arena and the logistics and learning capabilities needed to achieve eco-efficiency in supply chains.
Design/methodology/approach
The insights derived from a systematic literature review approach to identify the most relevant articles to be included in the analysis represented the starting point for building the authors empirical investigation, based on case studies with in-depth interviews to investigate the phenomenon under consideration and to explore trends and evolving paradigms.
Findings
The systematic literature review enriches the existing literature by drawing on three bodies of knowledge, i.e. logistics service providers, eco-efficiency and logistics innovation, and putting them into a single framework. The findings from the interviews suggest that although LSPs are well placed to implement innovative initiatives for eco-efficiency there is a range of inhibitors that prevent major change programmes.
Research limitations/implications
The research reported in this paper is exploratory and limited in its scope. It is based on in-depth interviews within six companies. However, it does provide a platform from which more detailed research may be conducted.
Practical implications
The managerial implications arising from the research offer a wide range of current practices in sustainability, from which strategic and operative directions to compete can be derived.
Originality/value
There is little existing literature that addresses the innovative strategies undertaken by LSPs in influencing and moving supply chains towards eco-efficiency and hence the present paper is meant to help fill this gap.
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Chaminda Wijethilake and Athula Ekanayake
Purpose – The purpose of this paper is to develop a framework which sheds new light on how sustainability control systems (SCS) can be used in proactive strategic responses to…
Abstract
Purpose – The purpose of this paper is to develop a framework which sheds new light on how sustainability control systems (SCS) can be used in proactive strategic responses to corporate sustainability pressures.
Design/Methodology/Approach – Corporate sustainability pressures are identified using insights from institutional theory and the resource-based view of the firm.
Findings – The paper presents an integrated framework showing the corporate sustainability pressures, proactive strategic responses to these pressures, and how organizations might use SCS in their responses to the corporate sustainability pressures they face.
Practical Implications – The proposed framework shows how organizations can use SCS in proactive strategic responses to corporate sustainability pressures.
Originality/Value – The paper suggests that instead of using traditional financial-oriented management control systems, organizations need more focus on emerging SCS as a means of achieving sustainability objectives. In particular, the paper proposes different SCS tools that can be used in proactive strategic responses to sustainability pressures in terms of (i) specifying and communicating sustainability objectives, (ii) monitoring sustainability performance, and (iii) providing motivation by linking sustainability rewards to performance.
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Vera Ferrón Vilchez and Dante Ignacio Leyva de la Hiz
This chapter proposes frugal eco-innovation as an eco-efficient way into which firms might shift their existing business models, exploring how firms are able to cut costs and…
Abstract
Purpose
This chapter proposes frugal eco-innovation as an eco-efficient way into which firms might shift their existing business models, exploring how firms are able to cut costs and reduce negative environmental impacts simultaneously.
Design/methodology/approach
This work introduces the concept of frugal eco-innovation based on numerous examples about how several European companies are adopting this management perspective. These examples are obtained from these companies’ public environmental reports.
Findings
A summary of how cost reduction could be achieved by firms on the basis of frugal eco-innovation; further, the pathway for how managers could achieve an effective implementation of frugal eco-innovation.
Practical implications
By developing frugal eco-innovation, managers are able to benefit from a management alternative that is ecologically sustainable and economically profitable.
Social implications
This work highlights how frugal eco-innovation could benefit, on the one hand, firms via the achievement of cost reduction and, on the other hand, the society in general via the diminution of the negative environmental impacts generated by the business activity.
Originality/value
This work analyses a management orientation that could be implemented in order to shift business models towards a more ecological production, highlighting how firms are able to do more with less.
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