A cross-country comparison of green initiatives, green performance and financial performance

Abstract

Purpose The purpose of this paper is to investigate the relationship between green initiatives, green performance, and a firm’s financial performance in the world. The existing literature on environmental initiatives and their impacts is limited to the context of a particular country. This gap points to a lack of clarification of variations in environmental regulation and in economic disparity which may affect the impact of green initiatives on green performance and on financial performance. Design/methodology/approach Data on the world top 500 publicly traded companies are collected from Compustat, a database of financial, statistical and market information on global companies, and from Newsweek, an information gatekeeper that enables consumers to access a list of environmentally friendly companies. The paper adopts linear regression to test the relationships between variables. Findings The results show that green initiatives have a positive impact on green performance, which in turn has a positive impact on financial performance. However, the impact of green initiatives varies by country. The study revealed that companies in European countries and Canada lead in the green initiatives and green performance, followed by the USA and Japan. China and Hong Kong lag behind compared to other countries. Research limitations/implications The small sample size in some of the countries used in this study may impact the validity of the results. Practical implications This study suggests that companies that seek financial benefits of pursuing green initiatives should have a long-term orientation when implementing these initiatives and should consider the country where they operate. Originality/value The current study provides a global understanding of the relationship between green initiatives, green performance, and financial performance, and contributes to the literature by highlighting variation among countries and by year.

Valuation of Environmental Management Standard ISO 14001: Evidence from an Emerging Market

“…Announcement of the adoption of the ISO 14001 standards helps to gain a substantial positive effect on the stock values (Jacobs et al 2010). Chen et al (2018) also indicate a positive financial impact of green performances. Klassen and McLaughlin (1996) also show a positive effect of ISO 14001 certification on the valuation of the stocks.…”

“…Secondly, the association between market performance and ISO 14001 is inconclusive and slightly mixed. Some researchers reported a positive association (Chen et al 2018;Flammer 2013;Jacobs et al 2010;Wahba 2010;Dowell et al 2000;Melnyk et al 2003;Klassen and McLaughlin 1996) while others found negative or weak associations (Lee et al 2008;Cañón-de-Francia and Garcés-Ayerbe 2009;King and Lenox 2001;Aarts and Vos 2001). Therefore, it is still unclear whether ISO 14001 enhances the market evaluation of the firms or not.…”

Measuring the impact of sustainability policy and practices in tourism and hospitality industry

“…In light of the growing ecological deterioration, sustainable development has emerged as noteworthy priority and a veritable challenge of our time (Alameeri, Ajmal, Hussain, & Helo, ; Ashraf et al, ; Melissen et al, ; Yarimoglu & Binboga, ). Consequently, in the hotel domain, environmental responsiveness is now steadily becoming a corporate issue (Chen, Ngniatedema, & Li, ; Chen, ; Kularatne et al, ). Therefore, hoteliers should address sustainability at all levels from policies formulation to final performance which is the criterion of achieving superior performance (Jenkins & Karanikola, ).…”

“…However, as for hotel industry, the initial motivation to implement environmental activities was restricted up to cost saving through confining waste and energy usage (Alameeri et al, ). But, due to the rising demand for sustainable hotels, the successful implementation of sustainable initiatives has become not merely a cost saving activity but evenly related with guest expectations and demand for organizational image (Font et al, ; Chen et al, ). Even, environmental management superiority allows hotel to charge premium prices per room, increase sale by targeting potentially lucrative consumer segments, generate more cash, and so on (Leonidou et al, ).…”

“…Similarly, Segarra‐Oña et al () reported environmental reputation as a vital factor impacting hotels' financial performance. Further studies reported that “it pays to be green” (Dixon‐Fowler, Slater, Johnson, Ellstrand, & Romi, ; Chen et al, ). Nevertheless, the time‐interval between investing in ecological sustainability implementation and enjoying the outcomes of related investments may be long and uncertain (Shashi, Cerchione, & Singh, ).…”