Is ISO 14001 certification effective?: an experimental analysis of firm profitability

Abstract

This paper examines the effect environmental management certification (ISO 14001) has on publicly traded Brazilian companies profitability. Signaling theory predicts that the certification serves to signal to society good environmental behavior; allowing people to screen the different types of firms, improving the financialeconomic performance of those firms that engage in this behavior. We performed difference-in-difference fixed effect design comparing the financial performance of companies with and without certification of their environmental management systems, using data on 552 companies over the period from 1996 to 2008. The results indicate that firms with an environmental management system certified according to the NBR ISO 14001:2004 standard tended to be more profitable, on average, than firms without certification.

Sustainability Certifications and Financial Profitability: An Analysis on Palm Oil Companies in Malaysia

“…subscription fee and remain profitable. Consistently, empirical evidence in the past literature show positive relationship between certification and profitability (see Haslinda & Glen 2006;Ferron et al 2012;Gijs et al 2015).…”

“…Moreover, FSC certification provides a brighter opportunity to access the European markets for forest operators (Humphries & Kainer 2006). Consistently, Brazilian companies with environmental management system certificates tend to be more profitable than firms without the certification (Ferron et al 2012). In Malaysia, public listed companies with environmental disclosure be likely to have higher profit margin (see Haslinda & Glen 2006;Perry et al 2011).…”

Economic Development Matters: A Meta‐Regression Analysis on the Relation between Environmental Management and Financial Performance

“…This finding might be a first indicator that the CEP‐CFP link depends on the level of economic development. Ferron and colleagues () suggest that enhanced efficiency by saving materials and preventing waste highly affects the cost structure in these countries. Arafat and colleagues (), who state that enhanced CEP affects learning in developing countries, confirm this result.…”

“…For the large positive effect in developing countries, we especially suspect enhanced efficiency by saving materials and preventing waste (Ferron et al. ), learning effects (Arafat et al. ), and environmental supplier development (Agan et al.…”

The Impact of ISO 14001 Certification on Cost Behavior of Petrochemical Companies Listed in the BM&FBOVESPA Stock Exchange

“…Similarly, Campos et al () analyzed a group of 109 Brazilian companies, and although no significant statistical differences were detected for any of the variables, they were able to conclude that the set of ISO 14001–certified companies reported higher profitability for all analyzed performance factors when compared to other groups. Ferron, Funchal, Nossa, and Teixeira () analyzed 552 Brazilian stock exchange‐listed companies between 1996 and 2008 and determined that ISO 14001–certified companies showed higher profitability than noncertified companies.…”