There is ever increasing social pressure for businesses to adopt sustainable methods of production to minimize environmental impacts. While this may be laudable, businesses have a responsibility to their stakeholders to maximize financial results. These potentially competing objectives are often referred to as part of the triple bottom line. In this paper, we restrict our attention to the original bottom line, Earnings per Share, and the Environmental bottom line of conserving resources. Focusing on the health care sector, we find a clear relationship between EPS and the adoption of sustainable practices. We augment this study with a look at expectations. That is, to what extent are sustainable business practices affecting the financial markets assessment of expected future success v. current financial success? Future expectations could be affected if environmental initiatives signal enlightened leadership or if a business that adopts environmental initiatives is thus well-positioned to face regulatory uncertainty in the future. Either of these management advantages would raise expectations of future success and thus be reflected in higher stock prices today, beyond what is currently captured in earnings ratios.
We assess students appreciation and use of various tools designed to extend effective learning beyond the classroom. For a given tool, results vary depending upon the overall pedagogical approach of the course.
<p>Firms have a responsibility to their shareholders to maximize their financial performance however they are increasingly scrutinized for environmental practices as well. These two objectives are often thought to be in conflict; it can be costly to be a good steward of the environment however it may be more costly in the long run to ignore societal pressures and environmental impacts. While various studies provide ambiguous and sometimes contradictory results, we conduct a rigorous analysis of the health care sector using Trucost’s Environmental Impact Score and financial data. The study uses regression analysis to identify the extent to which the benefit to the firm of reducing its environmental impact is financially beneficial. In the health care sector, an increase in the environmental impact score of 1 unit is correlated with an increase of 4% of their earnings per share. Improving the environmental bottom line improves the financial bottom line.</p>
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